Be Careful What You List For–Competition Tribunal Orders TREB to Lift Restrictions on Use of MLS Data

Earlier this month, the Competition Tribunal issued its order for a remedy following its decision in late April finding that the Toronto Real Estate Board (TREB) had abused its dominant position in imposing restrictions on the use of data on its Multiple Listing Service (MLS) contrary to Section 79 of the Competition Act

Background

Initially, the Tribunal actually dismissed the Commissioner’s application in 2013. The Commissioner successfully appealed and the case was sent back to to the Tribunal for a rehearing in 2015.

In late April, the Tribunal issued its long-awaited ruling, which reversed its prior decision and held that TREB had abused its dominant position. The Tribunal gave TREB 60 days to lift the restrictions prohibiting agents from using home sales data on their virtual office websites (VOWs); websites that could be accessed by consumers on their computers, tablets and smartphones. TREB was also ordered to pay costs to the Commissioner of over $1.8 million.

TREB’s Abuse of Dominance

The Tribunal found that restrictions imposed by TREB’s on the use of MLS data (in particular sales prices) on agents’ VOWs substantially prevented competition by inhibiting innovation in the residential real estate services market.

Importantly, the Tribunal held that, despite the fact that TREB was an association that did not itself compete in the market for residential real estate services, it could be subject to an order under the abuse provisions. In this case, TREB was found to have controlled access to, and use of, MLS data and imposed conditions to the use of MLS data that impacted how its member real estate agents could compete with one another. The Tribunal also held that TREB had an interest in exercising its control over the MLS in a manner that benefitted members who were offering traditional services and was to the detriment of members who were seeking to pursue innovative service models. 

Key Takeaways

Some of the key takeaways from the TREB case include:

  1. The Tribunal’s confirmation of the “hypothetical monopolist” approach as appropriate framework for market definition in abuse of dominance cases;
  2. That associations can abuse their dominant positions where they partake in conduct (for example, standard-setting, the imposition of rules of conduct, etc.) that insulates its members from competition or favour some members at the expense of others – which may result in higher prices, reduced service levels and decreased innovation; and 
  3. The Commissioner’s focus on the digital economy, including taking enforcement action to ensure that Canadians benefit from innovation and new technologies. Other examples include recent enforcement action in the misleading advertising space and the recently-announced market study regarding technology-led innovation in the financial services sector (click here for our e-LERT regarding the study).

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