Competition Tribunal Dismisses Abuse Case Against Toronto Real Estate Board
April 16, 2013
On April 15, 2013, the Competition Tribunal (Tribunal) released its decision in the high-profile case against Toronto Real Estate Board (TREB) regarding access to the Toronto Multiple Listing Service system (Toronto MLS system). The Tribunal held that because TREB (a trade association) does not compete with its members, its actions in relation to those members are not subject to review under the abuse of dominance provision of the Competition Act (Act).
In May 2011, the Commissioner of Competition (Commissioner) initiated abuse of dominance proceedings against the TREB under section 79 of the Act, alleging that TREB was using its control of the Toronto MLS System to enforce certain rules that limit the use of the Toronto MLS System and related data on the Internet by TREB’s member agents. The Commissioner further alleged that TREB’s rules substantially prevent and lessen competition in the market for the supply of residential real estate brokerage services to vendors and purchasers in the Greater Toronto Area (GTA).
The Commissioner’s application sought an order from the Tribunal that would have, among other things, forced TREB to eliminate rules that deny real estate agents the ability to introduce Internet-based real estate brokerage services, such as "virtual office websites".
The Tribunal dismissed the Commissioner’s allegations of anti-competitive practices by TREB, noting that the alleged anti-competitive practices do not fall within the scope of the abuse of dominance provisions of the Act, as they are not directed at a "competitor." More specifically, the Tribunal concluded that the Commissioner’s application did not follow the analysis set forth in the Federal Court of Appeal’s (FCA) decision in Canada (Commissioner of Competition) v. Canada Pipe Co. (Canada Pipe) because TREB does not compete with its member agents and therefore, TREB’s rules cannot have a negative effect on a competitor, as was found in Canada Pipe.
The Tribunal also noted that Commissioner’s suggestion that certain acts not directed at competitors could also constitute "anti-competitive acts" is wrong, as it would extend the reach of section 79 beyond the principles set forth by the FCA in Canada Pipe and those set forth in the Commissioner’s recently published revised Abuse of Dominance Guidelines.
Finally, the Tribunal also relied on subsection 79(4) of the Act, in support of its consideration that paragraph 79(1)(b) applies only if the dominant firm is a "competitor."
McCarthy Tétrault Notes
While the Tribunal dismissed the Commissioner’s allegations, it left the door open to an application under section 90.1 of the Act, which authorizes the Tribunal to make remedial cease-and-desist orders in connection with agreements between competitors that substantially prevent or lessen competition. The Tribunal noted that in his Competitor Collaboration Guidelines, the Commissioner considers that rules, policies, by-laws or other initiatives that prevent or lessen competition substantially and that are enacted and enforced by a trade association with the approval of members who are competitors constitute agreements between competitors for the purposes of section 90.1 of the Act.
It remains to be seen whether the Tribunal would consider that an application by the Commissioner under section 90.1 of the Act would be contrary to subsection 90.1(10) of the Act, which provides that the Commissioner cannot commence proceedings under section 90.1 on the basis of the same facts on which an order is sought by the Commissioner under section 79 of the Act.