The Ottawa-based agency said Monday it will challenge rules created by the Canadian Real Estate Association (CREA) that “limit consumer choice” and stop real estate agents from being more “innovative” in the services they offer.
The Bureau’s target is the multiple listing service, the system owned by CREA which is estimated to control about 90% of all transactions in Canada.
“We are concerned CREA has passed rules that are anti-competitive.” said Melanie Aitken, commissioner of competition. “Our case is about letting consumers choose, let agents offer difference choices to consumers. We have been in dialogue with CREA for almost three years now and intense negotiations since October.”
One of the concerns of 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. Consumers have to opt for an entire suite of services that come with a commission rate of about 5%, though it differs from province to province.
The commissioner has filed an application with the Competition Tribunal to strike down what it calls CREA’s anti-competitive rules. No financial penalty is being sought.
“CREA views the Commissioner’s decision as surprising and disappointing,” Dale Ripplinger, president of CREA, said in a statement. “We do not agree with the Bureau’s position that certain CREA rules are anti-competitive, either as a matter of fact or as a matter of law.”
If victorious, the move by the Competition Bureau should result in lower rates for consumers who choose to buy limited services from a realtor. “In our experience if you introduce choice, you introduce innovation, you introduce enhanced competition, there is downward pressure on prices,” Ms. Aitken said.
“In United States, where they have dismantled rules quite similar to these, competition is flourishing.”
Real estate author and former member of parliament Garth Turner said the days of CREA’s dominance are all but over. “The writing is on the wall for MLS. There have been shots across the bow and CREA has fought back. Now the government is making it clear this looks an awful lot like a monopoly and it is hard to defend. You look what happened in the United States and it was bound to happen in Canada.”
Mr. Turner expects the MLS will eventually completely open up with consumers able to list a home on their own, even without using a broker. “This is an interim step until we get to that end result.”
Lawyer Lawrence Dale, a part owner of Realtysellers (Ontario) Ltd., which sued the Toronto Real Estate Board (TREB) and Canadian Real Estate Association, alleging the two organizations were forcing the company to raise the price it charged home buyers and sellers, said the rules have been restricting agents from offering different services. Realtysellers offered a program that allowed you to get an MLS listing for $695. The two sides settled their lawsuit out of court.
“This upped the ante,” said Mr. Dale, about the Bureau taking CREA to a tribunal. “They built this great system but when you build a great system and become a monopoly, you use some of your liberties. That’s competition law. You can’t abuse your dominance.”
Don Lawby, chief executive of Century 21 Canada, said it’s too early to know what the end result will be. He said some local boards may choose to opt out of the MLS system.
“One thing I can tell, is this is a competitive industry. There are every kind of commission structure out there. There have been discount brokers as long as I have been in this industry,” said Mr. Lawby. He said the action by the Competition Bureau will open the door for discounters to charge an MLS access fee, but provide no services.
Michael Polzler, senior vice-president of Re/Max Ontario-Atlantic Canada, said he’s not all that worried about competition from discount brokers offering very limited service.
“We believe people should have options when they are selling their home. It is the largest transaction that most people make and most will continue to use the services of a realtor,” said Mr. Polzler.
gmarr@nationalpost.com
