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Canada’s antitrust watchdog received permission from a court this week to continue its probe into whether the country’s leading real estate organization sapped competition and drove up costs for consumers.
The Globe and Mail reported on Thursday that a court granted permission for Canada’s Competition Bureau to demand records from the Canadian Real Estate Association (CREA).
The bureau is looking into whether CREA policies resulted in higher costs for buyers and sellers, and whether the rules prevent other listing services from competing with the organization’s own MLS. CREA, Canada’s largest real estate association, must provide the records to help with the investigation.
“CREA believes its rules and policies are both pro-competitive and pro-consumer, including by increasing transparency and helping Realtors better serve Canadian property buyers and sellers,” CREA Chair James Mabey said in a statement on Thursday.
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The inquiry is reminiscent of investigations and lawsuits that have engulfed the industry’s biggest players in the U.S. in recent years, and it includes a review of multiple policies that are similar to those under scrutiny in the U.S.
Canadian authorities are looking into a CREA rule that requires listing agents to collect commissions from sellers to pay buyer agents for properties sold on the MLS, the Globe and Mail reported.
According to CREA’s rules, “the listing Realtor member agrees to pay to the co-operating (i.e. selling) Realtor member compensation for the cooperative selling of the property. An offer of compensation of zero is not acceptable.”
Regulators have said the rule disincentivizes competition among competing brokers and leads to steering. They also point out that Canadian Realtors are capable of seeing information, like commissions, that consumers can’t see when pursuing homes to buy.
The Globe and Mail reported that commissions are typically around 5 percent.
Canada’s real estate industry has also been the target of lawsuits that allege the rules in place amount to illegal price fixing, and the lawsuits have made allegations that are similar to the lawsuits in the U.S.
Canadian regulators are also looking into CREA’s cooperation policy, which was put in place earlier this year and requires Realtors to put their listings in an MLS within three days of it being marketed publicly. That policy, which is similar to NAR’s controversial Clear Cooperation Policy, favors large brokerages, the regulators said.
“Smaller brokerages with only a few agents working in them will have less of an opportunity to advertise their listings outside of an MLS system,” a regulator said in a court document requesting approval to pursue the documents, the outlet reported.
The U.S. Department of Justice has pursued an investigation into NAR’s Clear Cooperation Policy, which has been in effect since 2020.
NAR recently heard arguments in favor of repealing or changing the policy and a committee weighing changes plans to meet later this month to decide.
