Archive for the 'Associations' Category
On May 27, 2011 the Competition Bureau commenced an abuse of dominance case against the Toronto Real Estate Board (“TREB”) before the federal Competition Tribunal.
To establish abuse of dominance under the Competition Act, the Commissioner of Competition must establish that a firm (or firms) is dominant in one or more relevant markets, it has engaged in a practice of anti-competitive acts that has resulted in (or is likely to result in) a substantial lessening of competition. Where the Tribunal finds that a firm has abused its dominant position, it may make remedial orders (e.g., for the conduct to cease) or order the payment of administrative monetary penalties of up to $10 million ($15 million for subsequent orders).
In its case against TREB, the Commissioner is essentially alleging that through TREB’s MLS rules, which govern the access and use of members’ property listing information, TREB is preventing members from offering innovative non-traditional real estate services including “virtual office websites” or “VOWs” (secure password-protected websites that allow residential real estate customers to search a database containing MLS information themselves, rather than utilizing traditional bricks and mortar real estate brokerage services – for example, receiving property listing information from agents in person, by fax or by email).
With respect to TREB’s market presence, the Bureau alleges that TREB and its members substantially or completely control the market for the supply of residential real estate brokerage services in the greater Toronto area. According to the Bureau, TREB achieves its control of the relevant market through its control of its MLS system, which contains detailed member property listing information including historical sales data, by enacting and interpreting rules, policies and agreements that exclude some business models and restrict the offering of some types of innovative real estate services, including VOWs.
Specific TREB restrictions that the Bureau is challenging include rules restricting the advertising of listings, how MLS reports are provided to customers and restrictions on direct client searches of TREB MLS information.
Like its recent abuse of dominance case against The Canadian Real Estate Association, the Bureau is taking the position that TREB’s MLS system is a key (i.e., essential) input in the supply of residential real estate brokerage services, without which competing innovative brokerage models wishing to operate VOWs and other emerging Internet-based brokerage services cannot effectively compete. While arguments are sometimes made that there are competing property listing services in Canada, or that new listing services can enter or be established, the Bureau argues that the size and breadth of TREB’s MLS system (i.e., network effects) operates as a significant barrier to entry for any new property listing system that could otherwise operate as a substitute to the TREB MLS system.
With respect to TREB’s conduct, the Bureau argues that the interpretation and enforcement of TREB’s MLS rules are a practice of anti-competitive acts, the “purpose and effect of which is to discipline and exclude innovative brokers who would otherwise compete with TREB’s member brokers who use traditional methods.”
Finally, the Bureau’s view is that TREB’s MLS rules have lessened and prevented competition in the market for residential real estate brokerage services in the greater Toronto area. According to the Bureau, “TREB’s control of the relevant market through [its] MLS Restrictions gives it the power to exclude innovative brokerage models … protecting and perpetuating the static traditional brokerage model for the delivery of residential real estate brokerage services.” This, it says, denies consumers the benefits of downward pressure on commission rates and, to illustrate its point, the Bureau describes the fact that VOW brokerages are commonplace in the United States and offer rebates of up to 50% of a broker’s ordinary commissions.
Like the recently settled case against The Canadian Real Estate Association, the Bureau’s most recent challenge against organized real estate raises a number of interesting and largely unsettled abuse of dominance issues.
These include whether, and the extent to which, a real estate board can be said to control the market for a product that it does not actually supply (residential real estate brokerage services), whether the Tribunal will accept that the TREB MLS system is an essential input or facility (there has not yet to date been a decided essential facilities case in Canada) and how successful TREB will be in making arguments that it should have the right to assert control over or licence its MLS information (for example, based on intellectual property or privacy law arguments).
For a copy of the Commissioner’s Notice of Application see: The Commissioner of Competition and The Toronto Real Estate Board. For a copy of the Competition Bureau’s news release see: Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet.
___________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
The Competition Bureau announced today that it has filed an application with the federal Competition Tribunal seeking, according to the Bureau, to “prohibit anti-competitive practices by the Toronto Real Estate Board that are denying consumer choice and the ability of real estate agents to introduce innovative real estate brokerage services through the Internet.”
In making the announcement, the Bureau said:
“TREB is the largest real estate board in Canada, with approximately 31,000 members. It owns and operates the Toronto Multiple Listing Service system (the Toronto MLS system), which contains current property listings and historical information about the purchase and sale of residential real estate in Toronto and the surrounding area. The vast majority of local real estate transactions make use of the Toronto MLS system, which is an essential tool for agents to help customers buy and sell homes. TREB is restricting how its member agents can provide information from the Toronto MLS system to their customers, thereby denying member agents the ability to provide innovative brokerage services over the Internet.
Today, consumers are demanding a greater selection of service and pricing options when buying or selling their homes and many agents are eager to accommodate them, said Melanie Aitken, Commissioner of Competition. Yet TREB‘s leadership continues to impose anti-competitive restrictions on its members that deny consumer choice and stifle innovation.
Toronto MLS information is controlled by TREB and is only accessible to its members. It is much more detailed than what is available on public sites, such as Realtor.ca. For example, the Toronto MLS system contains data about previous listing and sale prices, historical prices for comparable properties in the area, and the amount of time a property has been on the market.
Because of TREB‘s restrictive practices, agents do not have the flexibility to share this important data with customers in innovative new ways, such as through password protected Web sites, also called Virtual Office Web sites (VOWs). VOWs permit a customer to search a full inventory of listings containing up to date data online, before making the decision to tour a home or attend an open house. This enables customers to be more selective and focused, and agents to spend less time trying to find an appropriate property for a specific customer.
While agents can provide detailed MLS listing information not available on Realtor.ca to customers by hand, mail, fax, or email, TREB‘s anti-competitive practices effectively prevent agents from providing the same MLS listing information to customers via a password-protected Web site. As a result, there are currently no VOWs operating in the Toronto real estate market that enable customers to search a full inventory of listings.”
For the full Competition Bureau news release see:
Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet
For a copy of the Commissioner’s Notice of Application see:
The Commissioner of Competition and The Toronto Real Estate Board
___________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
On May 24th, the European Commission announced that it had fined Suez Environment and Lyonnaise des Eaux €8 million for breaching a seal during a regulatory inspection.
In making the announcement, the Commission stated:
“Joaquín Almunia, Vice President of the Commission in charge of competition policy, said: ‘Inspections are a key tool in the fight against cartels as companies rarely voluntarily hand over evidence of anti-competitive practices. Even when a company does give evidence in return for immunity, the Commission must still prove the participation of others, the practices themselves and their duration. It is therefore important that companies do not break seals, which may be necessary when there is more than one office to inspect or a day is not enough.’
From 13 to 16 April 2010 the Commission conducted an inspection at the premises of water management companies in France, including LDE, over suspicions of anti-competitive behaviour (see MEMO/10/134). Coming back the morning of the second day, the Commission officials found that a seal had been broken at LDE’s headquarters. The Commission immediately started an investigation (see IP/10/691). LDE and Suez Environnement admitted that an LDE employee breached the seal, arguing an unintentional act
Breaches of seals are a serious infringement of competition law. The Commission however took into account the immediate and constructive cooperation of Suez Environnement and LDE, which provided more information than was its obligation, when setting the fine.
The investigation into suspected anticompetitive practices in the water and waste water markets is still on-going (see MEMO/10/134).”
Like the European Commission, the Competition Bureau has a wide range of enforcement powers available to it to investigate potential violations of competition law under the Competition Act. These include the power to obtain search warrants, document production orders, orders compelling testimony under oath and wiretaps. The Bureau is increasingly resorting to these powers, particularly in relation to its enforcement priorities that include the detection and investigation of criminal cartels and deceptive and fraudulent marketing.
The Competition Act also contains obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act[1] (see for example: Morgan Companies Fined $1 Million for Obstruction and Price-fixing).
As such, companies and organizations that may realistically face the prospect of a competition law investigation or search at some point – for example, companies in higher risk industries including construction, oil and gas, trade associations, etc – are well advised to adopt basic search and seizure guidelines to reduce the likelihood of breaching Canadian competition law in the event of a search.
These commonly include guidelines dealing with how to deal with Bureau officials during a search, advising company/organization personnel, the control of information and PR, inspecting the search warrant and reducing the risk of breaching the obstruction provisions of the Act which can lead to additional liability (such as by breaching sealed boxes or rooms or impeding Bureau officers during a search).
For the full news release see: Commission Fines Suez Environnement and Lyonnaise des Eaux €8 Million for the Breach of a Seal During an Inspection.
For more information about the Competition Bureau’s enforcement powers see: Competition Bureau Enforcement.
[1] Obstruction of an inquiry or examination is a criminal offence under the Act, with potential penalties, on summary conviction, of a fine up to $100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 10 years, or both (Act, subsections 64(1), (2)). Failure to comply with sections 11 (section 11 orders) or 15 (search warrants) are also criminal offences, with potential penalties, on summary conviction, of a fine up to 100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 2 years, or both (Act, subsections 65(1), (2)). In addition, destruction or alteration of records that are sought by the Bureau under section 11 (section 11 orders) or 15 (search warrants) is punishable, on summary conviction, by fines up to 100,000, imprisonment for up to 2 years, or both and, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment up to 10 years, or both (Act, subsection 65(3)). The Act also provides that corporate officers, directors or agents may be liable independently of whether a company is prosecuted for a failure to comply (Act, subsection 64(4)).
___________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Competition Bureau Tests New Price Maintenance Provisions with Challenge Against Visa and MasterCard
December 15, 2010
The Competition Bureau announced earlier today that it had filed an application with the federal Competition Tribunal, and was launching a challenge, against Visa and MasterCard in relation to alleged “restrictive and anti-competitive rules that Visa and MasterCard impose on merchants who accept their credit cards.”
November 12, 2010
“A [compliance] program also plays a crucial role for trade associations because trade associations face unique compliance issues. Given that an association provides a forum where competitors collaborate on association activities, trade associations are exposed to greater risks of anti-competitive conduct. A number of past Bureau cases have involved trade associations that were engaged in agreements to harm competition. It is therefore critical that trade associations implement credible and effective programs with strict codes of ethics and conduct. Such programs may allow trade associations and its members to avoid improper actions and to protect themselves from being used as a conduit for illegal activities. They may also allow trade association members to fully benefit from the association’s activities while reducing the potential for inadvertent contraventions of the Acts.” (Competition Bureau, Corporate Compliance Programs Information Bulletin)
November 6, 2010
Last month, the federal Competition Bureau started a criminal investigation into possible collusion involving the Quebec construction industry. The investigation is separate from an on-going investigation by the Bureau of the Quebec construction industry into bid-rigging, intimidation, fraud and influence. This investigation, together with others, shows that the Competition Bureau has significantly stepped up its enforcement efforts against the construction and other industries and is being closely watched by companies in British Columbia.
November 4, 2010
The Consent Agreement, which represents the settlement between the Competition Bureau and The Canadian Real Estate Association, has been filed with the federal Competition Tribunal.
November 2, 2010
The Vancouver Competition Policy Roundtable will be meeting Wednesday, November 3, 2010. The program will involve a discussion about the developments with respect to class actions in antitrust, led by Vancouver class action lawyers with updates on the state of play in the field. This breakfast meeting will be held from 8:00 – 9:30 on Wednesday morning.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
