The president of the Canadian Real Estate Association says there was no reason for the Competition Bureau to take its case to a tribunal because his group had already made the changes demanded by the Ottawa agency.

“We’ve taken steps to change our rules which should satisfy their concerns,” said Dale Ripplinger, president of CREA. “I don’t want to get into specifics because it may be before a tribunal but we addressed the concerns the commissioner had expressed to us.”

Melanie Aitken, commissioner of competition, said on Monday she had filed an application with the Competition Tribunal to strike down what she called “anti-competitive” rules. The case revolves around the Multiple Listing Service system, which is owned by CREA and accounts for about 90% of real-estate transactions in Canada.

“The Canadian Real Estate Association, through its members, has substantial control or complete control over the supply of residential real estate brokerage services throughout Canada,” the Bureau said in its filing to the Competition Tribunal. “CREA and its members have used CREA’s control of MLS and related trademarks to impose exclusionary restrictions on their use.”

One of the concerns spelled out by the Competition Bureau is that, under CREA’s rules, agents are prohibited from offering consumers the option of simply paying a fee to list a home on the MLS system. Instead, consumers have to opt for an entire suite of services that comes with a commission rate of about 5%, though it differs from province to province.

Also among the allegations is that CREA’s site available to the pubic offers substantially less information than is available to brokers.

“CREA also owns the realtor.ca (formerly mls.ca) website which provides the public with limited access to relevant information contained in the MLS system, such as listing price. However, only CREA members can access and share key data, such as the identity of the home owner, arrangements between brokers to share compensation and historical sales data (which market participates use to price and evaluate offers).”

The Bureau said it had been negotiating with CREA since October after starting an investigation about three years ago. Mr. Ripplinger said the two parties were close to an agreement last week and can’t understand why the commissioner went ahead with the application.

“We told the commissioner last week that we were in fact going to clarify the rules to meet her objectives so we were quite surprised and disappointed she went the tribunal route,” he said. “We told her last week we were going to do primarily what she had requested.”

Mr. Ripplinger said under current rules, consumers can already get the simpler options that Competition Bureau says has lowered fees in other jurisdictions like the United States.

“They can do it and with a clarification of the rules they will certainly be able to do it,” said the president. “We have examples all across the country of different business models, everything from a limited service where a company in Vancouver will post MLS listings for $299, all the way to full-service [agents] who negotiate their fees contingent on the service they provide.”

Mr. Ripplinger said CREA’s approximate 100 member boards have been supportive of the group’s position. No vote was taken to members because CREA did not come to an agreement with Bureau.

“I think we’ve got a very good case but any time you go to court there is a chance you could lose,” he said.

The case, which could take about a year to resolve, is very unusual in terms of competition law. “There have only been a handful of cases that have actually gone forward in this area under abuse of dominance,” said Richard Annan, a lawyer with Goodmans LLP.

Mr. Annan said the Competition Act provides for remedial relief, with the primary method usually being stopping the conduct of a group so it is no longer anti-competitive. In the last year, the Act has been amended to allow for fines of up to $10-million. However, the Bureau said it is not seeking a fine.

“The tribunal is basically a court. It has the same power as the Federal Court and has federal court judges on it. The wrinkle is they have added economist and business people as well to provide the expertise side,” said Mr. Annan.

Financial Post

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