In February 2010, the Commissioner of Competition commenced an application against The Canadian Real Estate Association (CREA)1 alleging that CREA violated the abuse of dominance provisions of the Competition Act. CREA is a trade association comprised of over 100 local real estate boards and 98,000 real estate brokers and agents. CREA owns the MLS® trademarks, which it licenses to local real estate boards and associations across Canada who use those trademarks in the operation of local MLS® systems.

The Commissioner alleges that CREA has imposed certain rules on the use of MLS® trademarks which substantially lessen or prevent competition in the market for the supply of residential real estate brokerage services to homesellers. In particular, the Commissioner alleges that CREA's MLS® rules reduce the variety of brokerage service packages available to homesellers and leave consumers with only the option of using a so-called full-service real estate broker if they want to sell their home using the MLS® system.

On March 25, 2010, CREA delivered its response to the application, opposing the application as being "fundamentally misconceived". CREA disputed the Commissioner's suggestion that consumers only have one option if they want to sell their house using a board's MLS® system, noting that CREA's member real estate brokers and agents offer a wide range of business models including "discounted" commission rates, flat-fee arrangements and various fee-for-service arrangements. CREA also rejected the Commissioner's suggestion that it has market power in the market for residential real estate brokerage services. As a trade association, CREA does not supply residential real estate brokerage services. Rather, its various broker members compete with one another for the business of homesellers and buyers across Canada.

CREA also disputed the Commissioner's allegation that its rules constitute a practice of anti-competitive acts, stating that under the rules, there has been vibrant competition amongst real estate brokers. In any event, the rules highlighted by the Commissioner as being of particular concern were recently amended by CREA's members in response to the issues raised by the Competition Bureau in order to clarify the way the rules operate. CREA also opposed the application on the basis that CREA's rules have not resulted in a substantial prevention or lessening of competition given the competition amongst real estate brokers, including from discount and fee-for-service real estate brokerage providers.

The Commissioner's application against CREA will be the first contested abuse of dominance case heard by the Competition Tribunal since Canada Pipe was decided in 2005.

Footnote

1 Stikeman Elliott LLP is counsel to CREA.

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