The Toronto Real Estate Board won’t have to comply with an Aug. 3 deadline set by the Competition Tribunal to start making available sold and other disputed data from its virtual office website feed.

The Federal Court of Appeal has stayed the Competition Tribunal’s order until TREB’s pending motion for a stay of the decision is heard. So far a date to hear the appeal has not been scheduled.



Note: This story was updated to clarify the order.

 

7 COMMENTS

  1. I believe that this matter was not being judged on its merits, as it relates to the Competition Tribunal, and the “redetermination hearing” — I believe that the original ruling of the Tribunal was correct. If in fact the original ruling of the Competition Tribunal was correct, simply put, it would mean the Competition Act does not apply to TREB and its rules relating to how the “sold data” may be used. Consequently to what extent is there a reasonable perception that the impetus behind the “redetermination hearing” was likely more a matter of politics than a reasonable application of the Law? With the aforesaid in mind, can we identify some claims that have been made by the Competition Bureau, that have also been advanced by the Tribunal, which seem to be more desperate than reasoned? How is it possible that the most emphasized aspect of real estate practice (Agency Law) could be ignored by the Competition Bureau, thus receiving no emphasis or any official recognition within their arguments!

    The following quoted paragraphs are from the Tribunals most recent public decision, as a result of the redetermination hearing:

    “[16] Accordingly, in addition to requiring the Disputed Data to be included in the VOW Data Feed, the order being sought by the Commissioner would reflect this general non-discrimination principle, as well as ensuring that the VOW Data Feed includes all MLS information that is available in other ways to TREB’s Members, and that there are no restrictions on how VOW operators or other Members may use MLS information on the VOW portions of their websites.”

    The glaring issue I see with the above paragraph [16] pertains to the following absolute directive: “…and that there are no restrictions on how VOW operators or other Members may use MLS information on the VOW portions of their websites.” Once again the subject of Agency Law has been ignored in this matter, as the Competition Bureau refused to even fundamentally qualify their demand by, at least, adding: notwithstanding the application of Agency Law!

    “[17] In brief, the Commissioner seeks an order that would, in his view, ensure a level playing field between more traditional “bricks and mortar” brokers and those who wish to provide new products and services based on MLS information in the manner that they think is appropriate, and in particular over the Internet.”

    When a new competitor enters a market should they typically expect a “level playing field” or an uphill battle to get established? Why would a VOW brokerage be entitled to a “level playing field” when most business aren’t entitled to special treatment in this regard? Were it the case that Canadian businesses were entitled to be protected from tilted playing fields, the NAFTA wouldn’t exist! Once again, the following comment ignores the subject of Agency Law: “who wish to provide new products and services based on MLS information in the manner that they think is appropriate,..” and avoids the subject of Agency Law by vaguely referring to: “new products and services…”.

    “[25] The Commissioner further submits that TREB’s business justifications for the MLS Restrictions should be rejected. Regarding privacy, the Commissioner argues that TREB’s position is belied by the fact that the information at issue in this proceeding is currently and freely distributed by traditional brokers to consumers on a regular basis by means other than a VOW.”

    The use of the word “freely” by the Commissioner in paragraph [25] is vexatious because in the context used it also ignores the subject of Agency Law, plus Buyer and Seller contracts. For example, when a Registrant or REALTOR is under contract to a Buyer they have a legal obligation to provide information and also expect to get paid for doing so! The Commissioner is clearly indulging in hyperbole with the use of the word “freely” to advance their argument at all costs.

    “[27] Finally, the Commissioner maintains that the MLS Restrictions, and in particular the narrower VOW Restrictions, have lessened and prevented, and will continue to lessen and prevent, competition substantially in the market for the supply of residential real estate brokerage services in the GTA. The Commissioner affirms that this is so because, “but for” those restrictions, consumers would benefit from substantially greater competition in that market. Specifically, the Commissioner states that the MLS Restrictions effectively protect and perpetuate the static traditional brokerage model for the delivery of residential real estate brokerage services. The impugned restrictions on innovative, Internet-based business models such as VOWs thus have negatively affected the range and quality of services being offered over the Internet by brokers to their customers and have denied consumers the benefits of downward pressure on commission rates that would otherwise exist.”

    Paragraph [27] was refuted most eloquently by the Competition Bureau’s own lawyer (John Rook) when he referred to the subject market as: ” the Red hot yet cutthroat GTA market”. The Commissioner’s use of fictional claims here is disturbing, as the truth of the very competitive nature of the GTA market is well known, by industry members and consumers who have participated in it. At least one, major brand, established brokerage in the GTA filed for bankruptcy earlier this year. The subject paragraph best exemplifies the: playing to win at all costs attitude of the Competition Bureau, as the Commissioner desperately set aside any notion of objectivity to create a fictional accounting that simply can’t be reconciled against reality!

    “[32] In determining whether a practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market, subsection 79(4) further requires the Tribunal to consider whether the practice is a result of superior competitive performance.”

    The question of “superior competitive performance” is also a question that relates to the subject of Agency Law. VOW’s attract prospects whom they allow to access their site on a “No Agency” Customer basis. This creates the question of: does this cause a: detrimental delay, in the consumer being developed into a Client and given the benefit of “Full Agency” Representation and protection, as compared to what would be the case with the more traditional brokerages — who accommodate but don’t promote: No Agency Relationships. Since the subject of Agency Law has been ignored by Competition Bureau the question of “detrimental delay” has been, easily, avoided.

    “[165] The Tribunal has also consistently interpreted the words “substantially or completely control” to be synonymous with market power. In turn, it has defined market power using various formulations, in particular “the ability to set prices above competitive levels for a considerable period” (Canada Pipe CT at para 122, aff’d Canada Pipe FCA Cross Appeal at paras 6 and 23-25; Canada (Director of Investigation and Research) v D & B Companies of Canada Ltd (1995), 64 CPR (3d) 216 (Comp. Trib.) (“Nielsen”) at pp. 232 and 254); “an ability to set prices above competitive levels and to maintain them at that level for a significant period of time without erosion by new entry or expansion of existing firms” (Tele-Direct at p. 82); and “the ability to profitably influence price, quality, variety, service, advertising, innovation or other dimensions of competition” (Commissioner of Competition v Canadian Waste Services Holdings Inc, 2001 Comp. Trib. 3 at para 7, aff’d 2003 FCA 131, leave to appeal refused [2004] 1 SCR vii). This latter definition was embraced by the Supreme Court of Canada in Tervita Corp v Canada (Commissioner of Competition), 2015 SCC 3 (“Tervita”) at paragraph 44. ”

    Regarding the above paragraph [165], the Competition Commissioner attempts to assert that TREB’s members benefit by any of TREB’s actions that the Commissioner believes reduces competition. However, the Competition Bureau acknowledged there was ample price competition (commissions) when they changed their technical focus to: “non price” competition. In a regulated industry such as organized real estate the subject of “non price” competition should be purely a: Provincial Regulatory matter.

    “[299] The very essence of competition involves finding new and innovative ways to make one’s products more attractive to one’s customers. So long as such practices are unrelated to an anti-competitive purpose, whether subjective or deemed, they are pro-competitive in nature and constitute legitimate competition on the merits. However, where this is not obvious, an explanation needs to be provided as to how an impugned practice assists or is likely to assist the respondent to better compete in the relevant market.”

    A VOW’s Customer is only a “Customer” because of the relevance of Agency Law, in the initial instance. They are not typically customers under the literal definition of a customer, which is: “one that purchases a commodity or service” because the typical customer of a VOW doesn’t purchase the “sold data”, for example – directly or indirectly. As such, if the Competition Bureau wants to argue that Customers who are Customers because they are not Clients under Agency Law are to be recognized under the Act, then do so, but they have opened the door for a full discussion on the relevancy of Agency Law, to this matter. I would suggest that paragraph [299] incorrectly presumes the customer of a VOW to be a literal customer, and if I am correct in this regard it has been incorrectly applied in the context used. At the same time, the ambiguity of this situation reinforces the need for a full discussion on the relevancy of Agency Law to the merits of the Competition Bureaus arguments. Furthermore, websites are not the “products” of organized real estate, they are incidental to the business. The product of organized real estate is: SERVICE and the highest quality of service is provided to a “Client” under a “Full-Agency” working relationship.

    How could the giving away of data amount to “legitimate competition” –unless your data is better than someone else’s, when the intention of the Competition Bureau is that any brokerage will be allowed to provide the “sold data” in the manner utilized by a VOW? By insisting the giving away of the “sold data” amounts to competition, the Competition Bureau is indirectly acknowledging that there must be an additional cost to VOW’s for providing the service, and yet said additional cost has never been quantified by the Competition Bureau or even alluded to, as it would relate to the ability of a VOW to compete on the subject of commissions — let alone offer the reduced commission levels the Competition Commissioner has promised.

    “[322] The Tribunal finds that each of the above-mentioned acts challenged by the Commissioner is in fact anti-competitive and that, individually and collectively, they constitute a practice. In carefully calibrating the parameters of its VOW Policy and Rules, in deliberately eliminating provisions from the corresponding U.S. VOW policy that served as a “good starting point for the development of a TREB policy,” and in ultimately implementing the VOW Restrictions, TREB was motivated primarily by a desire to insulate its Members from disruptive competition.”

    Even if it was the case that the Commissioner and the Tribunal were correct with their accusation around TREB’s motives, as outlined in paragraph [322], the merits of the situation would still be one of a Regulatory Authority nature, perhaps, than a question of Competition. Some time ago CREA undertook an initiative called the: Direct Data Feed (DDF).
    This was done by CREA with the best of intentions to “level the playing field” as I understand it — as it would relate to more established members normally having more product to attract consumer interest. As an industry, organized real estate was already demonstrating very good character regarding this topic. Should the Competition Bureau prevail in the end, it would stand to reason that CREA would adapt REALTOR.ca, so that it could disseminate data in much the same way as a VOW, and ergo neutralize the Competition Bureau’s notion there would by any significant “disruptive competition” as a result of the existence of VOW’s. The end result of the aforesaid being that all the efforts of the Competition Bureau and the Tribunal will have had no ongoing effect whatsoever on broker to broker competition — proving that this matter was never something that should have attracted the interests of the Competition Bureau of Canada, and reinforcing the merits of the Tribunals original decision! Ironically, if the aforesaid was to come to fruition as a result of the Competition Bureau winning they stand to lose more face, and would be better off to lose (early) on appeal!

    “[759] Finally, TREB claims that the Tribunal does not have the jurisdiction to order TREB to grant a compulsory licence with respect to its intellectual property. In that respect, TREB distinguishes between sections 32 and 79 of the Act. TREB contends that, in the absence of clear language in section 79, it would be wrong to conclude that the Tribunal has been given the power to order a respondent to grant what are, in effect, compulsory licences, when, pursuant to section 32, the Federal Court can make such an order only after the applicant meets a competition impact test and only after defences based on international treaty rights are considered (Warner Music at paras 26-28).”

    “[760] The Tribunal considers that this case does not involve the imposition of a compulsory licence, as conventionally understood. TREB already makes each of the components of the Disputed Data available to its Members in other ways. More importantly, the VOW Restrictions go far beyond a refusal to include the Disputed Data in the VOW Data Feed, and include prohibitions on (i) the use of the information included in the VOW Data Feed for any purpose other than display on a website, and (ii) the display on a VOW of the information contained in the Disputed Data, which TREB makes available to its Members in other ways.”

    “[761] In any event, it is settled law that the Tribunal has the jurisdiction to order the supply of a proprietary product.”

    The use of the language: “The Tribunal considers that this case does not involve the imposition of a compulsory licence, as conventionally understood.” should be weighed against the fact that the Tribunal also considers a VOW to be a: Virtual Office Website, as opposed to a: Virtual Organization Website — despite the fact a full-blown VOW has the ability to display all the property listings of a Board or Association and more! The aforesaid point raises the question of: could the Tribunal still refuse to acknowledge TREBs position “…that the Tribunal does not have the jurisdiction to order TREB to grant a compulsory licence with respect to its intellectual property.” if the Tribunal were to acknowledge that a full-blown VOW isn’t merely a: Virtual Office Website, with the emphasis being on the meaning of the word “Office” — as the VOW is being put in the position of being able to offer data etcetera to the public in a way that is essentially the same as TREB offers data to its members, and in that sense TREB is granting what amounts to a special license since the VOW gains a status that resembles TREB’s status!

    To whatever extent that Canadians may see this matter as being more about the power and image of the Competition Bureau than being about the Law, gives rise to the potential that the Bureau may have more to lose by winning, than TREB ever did by losing!

    It will be very interesting to see what happens with TREB’s appeal.

  2. Regarding the following excerpts from the Competition Tribunals recent public decision involving TREB:

    “ORDER FURTHER TO THE REASONS ISSUED ON APRIL 27, 2016”

    “NOW, THEREFORE, THE TRIBUNAL ORDERS AS FOLLOWS: “…

    * (viii)  “TREB” means the Toronto Real Estate Board; 

    * (ix)  “VOW” means a password-protected virtual office website, which is an area of a brokerage’s website where consumers can access and search a database containing the Information;”


    The above referenced material (viii) and (ix) are definitions issued by the Tribunal for use with their order(s). In part, what the Tribunal is acknowledging with (ix) is that these VOW websites must be “password protected”. In this context the password is intended to protect the rights of the “owner’s of the data” as opposed to the person who is granted access to the data.

    To suggest that VOW’s will be password protected is: foolish insolent talk — which of course is how the Webster’s Dictionary defines, in part, the word: bullshit. When any consumer is granted free access and a password to a VOW and the identity of those consumers is not verified (beyond an email address), nor is there even any physical meeting of the parties, it profoundly belies any notion of the security a password would normally represent! Industry members have even had to change their passwords, periodically, to maintain the integrity of passwords.

    The subject of “passwords” as it relates to this overall matter, is also important in regards to the Competition Bureau’s stratagem of pushing the “innovation” argument — which, of course, the Tribunal has also embraced. At least, one VOW proponent is already on the record as saying the “sold data” is crucial to proceeding with the launch of a VOW platform. In other words, the main attraction for consumer’s is said “sold data”. Any Registrant, REALTOR, practitioner simply by virtue of being allowed to give their password away to an industry or Board database, to a consumer, can facilitate direct consumer access to the “sold data” at the center of this issue.

    Since the “sold data” is crucial to the operators of VOW’s, and access to this “sold data” is really only about the question of giving passwords away, one can only draw the incontrovertible conclusion that the Competition Bureau of Canada considers: the freely giving away of passwords to industry databases as amounting to: “innovation”!

    The captivating beauty of Common Law is in its strong relationship with “common sense”. While the Law can get very complicated, at times, the complicated aspects have more to do with procedure than understanding the basic merits of something. As far as understanding the points I’ve raised here are concerned, it has nothing particular to do with the Law per se’ (Competition Act Articles etc.) but everything to do with “common sense” — which should be inclusive to the Law.

    In my opinion, if the Competition Bureau of Canada can snub basic “common sense” along the way towards making reference and arguments relating to specific sections of the Competition Act, then the integrity of the Act is washed in the same tub, and there’s a strong risk of: “throwing out the baby with the bath water”!

    Hopefully TREB’s lawyers will argue these points and others on appeal, and hopefully, it will matter.

  3. Let’s be clear on what’s happened here: the Court stayed the original order simply because it did not have time to consider TREB’s application for a stay. If the application is denied TREB will have to provide the data before the appeal is heard.

  4. Congratulations to TREB regarding the subject announcement.

    Most readers probably won’t realize the extent that members of the judiciary are already involved in the TREB matter. One of the members of the Tribunal, for this round, is none other than: Paul Crampton, who is the Chief Justice of the Federal Court. I find it interesting that such a prominent person would be a Tribunal member, as opposed to someone who might have less influence.

    I also find it interesting to read many of the sections of the Competition Tribunals public decision regarding this matter, such as the following:

    “[776] More specifically, CREA states that consumers are concerned about their property information being disclosed on a public website and adds that realtors who placed such information on the MLS system and who provide services using that system may negatively affect the credibility of CREA’s trade-marks. However, as discussed at paragraphs 382-387 of these reasons, the evidence that consumers may be concerned about the display of the Disputed Data on VOWs was very limited and not persuasive. In any event, the Tribunal has not been persuaded that existing consents in the standard Listing Agreement that TREB recommends its Members to execute with their clients do not extend to the display of historical information such as the sold price of their home and WEST listings information, after their homes have been sold.”

    What makes the entire discussion so frustrating, is the apparently endless space to argue a point of view that could be viewed as ambiguous — particularly on the part of the Competition Bureau, as the party that has brought the fight! Since in the above quoted excerpt the Tribunal seems to be acknowledging that seller consent should be considered, but: “…the Tribunal has not been persuaded that existing consents in the standard Listing Agreement that TREB recommends its Members to execute with their clients do not extend to the display of historical information such as the sold price of their home” that if said “consents” we’re to be made unequivocally clear how the seller wants their data shared or not shared that the Tribunal would have no choice but to be “persuaded”!

    • Great comment. I re-posted on our company FB. Ok, Let’s change the “consents section” of Listing Agmnt to be VERY CLEAR …. see original quote from Alan M comment ” … that if said “consents” we’re to be made unequivocally clear how the seller wants their data shared or not shared that the Tribunal would have no choice but to be “persuaded”!…..”

      • Robert, what’s particularly interesting about the question of “consent” ties into the following paragraph from the Tribunals public decision:

        “[388] Finally, TREB asserts that its decision to exclude the Disputed Data from the VOW Data Feed was prudent given the requirements of the PIPEDA and a 2009 decision of the OPC which essentially held that the publication of an advertisement stating that a property had sold for 99.3% of the asking price contravened the PIPEDA, because it enabled the public to calculate the sold price. Although the sold price of the home was available on the public property register, the OPC held in that decision that the exception for public information in paragraph 7(3)(h.1) of the PIPEDA did not apply because the information in question was obtained pursuant to the purchase agreement to which the salesperson was privy, and was not actually collected from a publicly available source.”

        Shockingly, the Tribunal doesn’t directly dispute the relevance and applicability of PIPEDA, as per the anecdote in the above paragraph. Instead the Tribunal, in their response, accuses TREB of not really being interested in the “Privacy” issue based on how they (TREB) usually have distributed the data — so consequently, that apparently justifies the Tribunal in ignoring the PIPEDA themselves, as it relates to the Tribunal considering TREB’s legitimate business reasons! It’s unbelievable that the Tribunal would use an accusation against TREB, as an excuse for them to ligitimize the Tribunal in seemingly being entitled to dismiss the legal pertinence of PIPEDA!

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