Canada To Real Estate Brokers: Competition, Competition And Competition Are Also Important

While the three most important things about real estate may be location, location and location, Canadian antitrust enforcers are telling real estate brokers that competition is also important.

The Competition Bureau of Canada has entered into a consent agreement with the Canadian Real Estate Association (CREA) settling the Bureau’s claims that the rules imposed by the CREA limited consumer choice and prevented innovation in the market for residential real estate services.

CREA is a trade association whose membership includes more than 100 Canadian real estate boards and approximately 90% of licensed real estate brokers in Canada.

In February 2010, the Canadian Commissioner of Competition made an application to the Competition Tribunal alleging that CREA had “substantial and complete control over the supply of residential real estate brokerage services throughout Canada” through the Multiple Listing Service (MLS).  The application sought to enjoin “exclusionary restrictions” by CREA that were affecting real estate brokers and agents who sought to provide less than a full package of brokerage services.

According to the Commissioner, MLS was the “only comprehensive listing of homes for sale in Canada,” with no adequate substitutes.  CREA imposed restrictions on the use of the MLS and required that its members periodically certify compliance with CREA’s rules and regulations.

Some of the alleged exclusionary restrictions required listing realtors to always act as agents for property sellers, disallowed agents from merely posting property information on the MLS system without using MLS’ other services, and provided that only the listing realtor’s name and contact information appear in publicly accessible websites.  The Commissioner determined that these rules restricted the ability of consumers to choose real estate services, while forcing them to pay for services they did not need.  The rules also allegedly prevented real estate agents from offering more innovative service and pricing options to consumers.