Backgrounder: Abuse of dominance by the Toronto Real Estate Board

For years, the Toronto Real Estate Board (TREB) abused its dominance in the Greater Toronto Area (GTA) by restricting real estate brokers’ and consumers’ access to historical home sales data and novel real estate services.

Determined in its commitment to ensure consumers receive the full benefits of competition among real estate agents in the GTA, the Competition Bureau has seen its challenge of TREB’s anti-competitive practices through a process of hearings and appeals over the past seven years. 

The Toronto Real Estate Board

TREB, Canada’s largest real estate board, has a membership of over 49,000 agents and brokers, serving a population of nearly 6.5 million Canadians in the GTA.  

The Case

In May, 2011, the Bureau first took action against TREB when it filed an application with the Competition Tribunal alleging it had abused its dominant position in the market for residential real estate brokerage services.

The case focused on TREB restrictions on the use and online disclosure of certain important data in the Multiple Listing Service (MLS) – a database containing both current property listings and historical sales data, such as sold prices. While TREB allowed its members to share data with clients by hand, email, or fax, it prevented the same data to be displayed online through Virtual Office Websites (VOWs), secure password-protected online portals where brokers can provide MLS information to their customers and clients. 

TREB also excluded these sales data from its electronic data feed to its members, limiting their ability to develop new and sophisticated analytical tools. The Bureau alleged that TREB’s restrictions limited the impact of new and innovative business models and services that were a competitive threat to TREB members who preferred to compete using more traditional business models. 

TREB’s argument claimed that these restrictions were designed to protect consumer privacy to comply with federal privacy law and requirements of the provincial real estate regulator.

Competition Tribunal ruling against TREB

In April 2016, the Competition Tribunal ruled that TREB had abused its dominant position, finding that:

• TREB controlled the market for MLS-based residential real estate services owing to its control over the MLS, a key input for the supply of residential real estate services;
• the purpose of TREB’s restrictions was to resist the emergence of VOW brokerages due to concerns that VOWs could lead to greater competition among its members; and
• TREB’s restrictions substantially prevented competition.

In June 2016, the Tribunal ordered TREB to stop its practice of anti-competitive acts, as well as other measures necessary to restore competition. 

Supreme Court of Canada decision

Following the Tribunal’s ruling, TREB filed a motion to appeal the decision with the Federal Court of Appeal (FCA), which was dismissed. TREB then filed an application for leave to appeal to the Supreme Court of Canada (SCC).

On August 23, 2018, the SCC ultimately ruled in favour of the Bureau and dismissed TREB’s application to appeal, meaning the Tribunal order would now take effect.

Outcomes

This decision – a win for competition, innovation and consumers in Canada’s largest real estate market – concludes seven years of litigation against TREB. It paves the way for greater competition by enabling greater access to new and innovative real estate services, more in-depth listing information and innovative online analytical tools.

Now that TREB is required to remove restrictions on its members’ access to real estate data, the Bureau expects that members of TREB will begin competing more vigorously, offering services that were previously impeded by TREB’s restrictions. Examples of services that witnesses provided to the Tribunal include:

• displaying historical sales data, including sold prices, on a VOW;
• offering online tools that allow clients to compare the market history and activity of properties listed in the same area;
• providing information on trends, such as price history, for properties in a given neighbourhood; and
• providing heat maps of condominiums that illustrate which units get better return on investment for purchasers.

Consumers in the GTA will soon have access to new and innovative real estate services, such as websites that empower consumers with more in-depth listing information and new and enhanced data-driven online analytical tools.

What this means for other real estate boards across Canada

Although the Tribunal’s decision and order relate only to TREB, the Bureau believes that the resolution of this case provides an opportunity for real estate boards across the country to reflect on their own rules, policies, and practices and to seize this opportunity to implement any appropriate measures that may be necessary to ensure compliance with the Competition Act.

The Bureau continues to encourage anyone who believes that they are aware of anti-competitive conduct to bring it to the Bureau’s attention by submitting a complaint with detailed information of the observed conduct.