Canada’s largest real estate board stifled competition, tribunal rules

Thursday Apr 28th, 2016

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The Toronto Real Estate Board prevented competition and stifled digital innovation by prohibiting its realtor members from posting sales data on their websites, the Competition Tribunal says in a decision that could have reverberations throughout the country.

The quasi-judicial tribunal says it has partially granted an application made by the federal commissioner of competition in 2011 that sought to have Canada's largest real estate board prohibited from engaging in certain anti-competitive practices.

During hearings in Toronto last September, the Competition Bureau argued that the real estate board acted with "malice and forethought" because it feared that competition from online startups could result in lower commissions for its member agents.

The board's practices prevented agents from being able to introduce new online services, the bureau argued.

The real estate board disputed the assertions, arguing that data such as what homes sold for is sensitive, and that posting it online would be a violation of consumers' personal privacy.

The case has garnered widespread attention, as it's expected that it may affect how other real estate boards provide services to their customers online.

"This is a long and complex decision, and we'll be analyzing it over the next few days," Pierre Leduc, a spokesman for the Canadian Real Estate Association, said in an email.

In a summary of its decision posted online Thursday, the tribunal says it concluded that the restrictions imposed by the board have substantially reduced the degree of competition among real estate brokerages in the Greater Toronto Area.

The adjudicative body says there has been a considerable negative impact on innovation as the result of the real estate board's practices.

However, the full reasons for the tribunal's decision are confidential for now. A public version of the decision is expected to be released in the coming days after it has been determined what information should remain confidential, the tribunal said.

The tribunal also says it is waiting to hear from both parties regarding a remedy before it issues the specific terms of its order.

"This is a good day for competition and innovation," John Pecman, the commissioner of competition, said in a statement.

"We welcome the decision and look forward to the hearing before the tribunal on remedies."

The real estate board said it was still reviewing the confidential, 170-page legal document outlining the decision.

"At this time we understand that no order has been issued and that the tribunal has only partially granted the bureau's application," John DiMichele, CEO of the Toronto Real Estate Board, said in a statement.

DiMichele declined further comment, noting that the board has not yet had the opportunity to review the text in depth.

 

Canada's Competition Tribunal says the real estate board in Canada's largest city stifles competition by limiting access to data on home sales.

The tribunal issued a lengthy ruling late Wednesday in a dispute between the Toronto Real Estate Board and the Competition Bureau of Canada.

The two sides have been fighting for years over who should have access to detailed data about home sales. The bureau argues that the Realtor group limits competition and subsequently keeps costs high by restricting access to data on its proprietary Multiple Listing Service, on which more than 90 per cent of all Canadian home sales get processed. 

TREB "restricts how its member agents provide information to consumers, such as previous listings and previous sale prices, thereby denying agents the ability to introduce new and innovative real estate brokerage services using the Internet," is how the bureau put it in a release Thursday.

The real estate board counters that it owns that data and needs to limit access to it for the privacy of buyers and sellers.

Preventing competition

The tribunal ruled in favour of the competition watchdog late Wednesday. A public version of the 170-page ruling is set to be released in the coming days, but for now the tribunal put out a one-page release explaining that it has come to a decision.

"The tribunal concluded that the … restrictions have had, are having and are likely to have the effect of preventing competition substantially in a market," the release said.

 

A full version of the judgment has yet to be released, "in order to protect properly confidential evidence" but will be released in the coming days, as soon as lawyers for both sides can agree on what can be made public.

It's not immediately clear what the ruling means for consumers, as the tribunal has yet to explain what penalties may be imposed or whether TREB will be ordered  to open up its data to anyone requesting it at some point.

"The specific terms of the tribunal's order will be determined after the parties have provided written submissions addressing this issue of remedy and have had an opportunity to make oral submissions on that issue," the tribunal said.

But despite being a quasi-judicial body, the tribunal makes binding decisions on issues brought forth by the bureau.

"At this time we understand that no order has been issued and that the tribunal has only partially granted the bureau's application," John DiMichele, CEO of the Toronto Real Estate Board, said in a statement. He declined to comment further, saying the board had not been able to review the ruling.

"This is a long and complex decision, and we'll be analyzing it over the next few days," Pierre Leduc, a spokesman for the Canadian Real Estate Association, said in an email.

TREB has vied openly with some of its own members in recent months, moving to shut down email or internet-based services that send out information on recent home sales.

Different rules elsewhere

Elsewhere in Canada, local real estate boards haven't cracked down on the practice.

 In Nova Scotia, for example, ViewPoint Realty has turned itself into one of the largest independent brokerages in the province by offering its trove of data on every real estate transaction in the province free of charge to consumers.

"We want to enable consumers to get a fully informed decision," CEO Bill McMullin said Thursday, which is why the company gives away detailed transaction data on its website. It gives the info away for free because ViewPoint has found that consumers are then more likely to work with the home-selling arm of the company because of its expertise and services like its popular mapping and search function.

Since its founding in 2010, the company has grown quickly, and now has 120 million page views a year on its website — all in a province where only 10,000 homes are sold every year, about a tenth of the number in Toronto.

McMullin said his company and many others would love to offer a similar service in Toronto and elsewhere, but can't under the current system.

"This looks like a decisive win for the Competition Bureau and consumers," he said, "but Realtors and brokerages could also benefit by finally having their hands untied from behind their backs."

 

 

 

with files from The Canadian Press

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