The Canadian Competition Bureau, that country’s equivalent of the U.S. Federal Trade Commission and U.S. Justice Department’s Antitrust Commission, has served the nation’s Realtor trade group with a federal court order that seeks documents and answers as a part of a formal investigation.
Alan Tennant, president for the Canadian Real Estate Association, stated in a notice to affiliated real estate boards and associations this week that CREA “was served with a federal court order obtained by the Competition Bureau” on March 16.
“This order … requires CREA to produce certain documents and answer certain questions in connection with a Bureau inquiry,” he stated. “Some of the information that CREA has been asked to provide resides with real estate boards and associations and we may request assistance in obtaining this information. We are currently consulting with counsel and will be in a position to advise boards and associations in more detail about the order during meetings in Ottawa on Saturday.”
A Competition Bureau spokeswoman confirmed the investigation. “We have opened an inquiry into CREA. We are gathering our information right now. We’re basically looking into seeing whether the proposed amendments to the MLS system raise any competition concerns,” said Pamela Wong, a spokeswoman for the agency.
Inman News reported this month that the bureau has been interviewing limited-service real estate brokers in the United States to understand the impact of real estate restrictions on such brokerage company models. A competition law officer for the bureau stated in a message to one U.S. broker that the bureau is “examining restrictions placed on limited-service brokers in the Canadian real estate market” in an effort to “understand the real estate industry and what the likely effects of the restrictions are on competition in Canada.”
News of the federal order comes just before CREA’s March 24 meeting in Ottawa in which association officials are scheduled to consider a set of multiple listing service requirements that the group has dubbed “Interpretations.”
If this list is approved, MLS members who list properties will be required to “receive and present all offers and counteroffers to the seller” and to “be available to provide professional advice and counsel to the seller on all offers and counteroffers unless otherwise directed by the seller in writing,” among other requirements.
Several state-level Realtor associations in the United States have pursued similar requirements through state regulations and laws, sometimes referred to as minimum-service measures, that mandate a specific level of real estate services for licensees, at least in some types of client agreements. The most restrictive of these measures, which have drawn opposition from the U.S. FTC and DOJ, ban business models that do not provide the specified set of services.
In Canada, CREA’s Interpretations also state that the “mere posting” of property information in an MLS without any obligations for the listing agent to remain an agent of the seller “is contrary to the rules and regulations” of the association, and non-MLS members would not be allowed to display CREA’s MLS trademarks on signs and advertising. CREA, which has about 88,000 members, is Canada’s equivalent to the National Association of Realtors, which has about 1.3 million members. NAR does not own U.S. trademarks for “MLS” and “multiple listing service,” though some local MLS associations have passed rules that seek to block MLS members from using these terms.
Tennant stated in a Jan. 25 notice to members that the items under consideration on the Interpretations list “do not have the effect of changing the rules and regulations, rather they are intended to indicate how the rules and regulations should be interpreted and applied when dealing with MLS trademark usage.” Tennant also stated that the justification in considering the rules was to protect the association’s MLS trademarks so they do not “become generic and therefore unenforceable.”
CREA had earlier considered a separate list of MLS rule changes, though members voted in September to delay consideration of the changes, and these proposed changes have since been replaced with the Interpretations proposal.
Competition Bureau officials in August submitted a letter reviewing the earlier CREA proposal for MLS rule changes, which stated that “adoption of the proposed amendments may constitute grounds to commence an inquiry,” or formal investigation, under Canada’s antitrust law. “Even if the proposed amendments are not passed, the bureau will continue to have concerns about CREA’s existing rules, as well as those of local boards, that serve to exclude entry-only and limited-service listings from MLS or otherwise restrict the ability of consumers to obtain the variety of relationships that they want with a broker,” the bureau stated.
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