By Tony Palermo

Day five of the Competition Tribunal hearing between the Commissioner of Competition and the Toronto Real Estate Board (TREB) opened in Ottawa Monday with Chief Justice Paul Crampton advising both sides that the two biggest questions for hearing panel concern substantiality – how much of an impact TREB’s rules have on its members – and whether privacy, when used as a business justification, is a genuine concern or was thought of after the fact to justify TREB’s position.

“Obviously there are other issues… but those are our two biggest questions,” said Crampton.



John Rook, counsel for the Competition Bureau, called expert witness Gregory Vistnes, vice-president of U.S.-based Charles River Associates, a global economic and financial consulting firm.  Prior to joining Charles River Associates, Vistnes worked as deputy director of anti-trust with the U.S. Federal Trade Commission. He also testified at the first tribunal hearing in 2012.

Vistnes spent most of the day on the stand. He said in his opinion, TREB has substantial market power and is exercising its market power to lessen competition. To illustrate his point, he said that a broker who does not have access to the MLS system effectively cannot compete in the real estate market. So, because TREB has control over who can access the MLS data and how, it essentially gives TREB the power to decide who can compete and who can’t.

“Because (TREB) controls access to MLS, it’s effectively dictating the rules on how, whether or not, and the form in which (brokers) can compete,” said Vistnes, adding that be believes TREB rules with an iron fist.

“In my opinion, TREB, by using their control over how and when (brokers access MLS), is preventing an entire class of competition in the market,” said Vistnes. “By excluding this class of competition – those brokers who want to compete by using a virtual office website (VOW), (TREB) is significantly reducing competition in the market.”

Vistnes said that in 2011, the question was whether any MLS information should be made available. Now, while some of the data is available to VOWs, he said the most important data – the sold information, which he called the “crown jewels” of the MLS data – is still restricted and that is where most of the harm is occurring.

In addressing the tribunal panel’s question of substantiality, Rook asked if Vistnes considered the lessening of this competition substantial. Vistnes replied that he did because, in part, there was evidence that consumers wanted to see the information that VOWs want to deliver.

During cross-examination, TREB counsel David Vaillancourt spent most of his time going over Vistnes’ previous testimony. In an effort to establish substantiality, Vaillancourt argued that while Vistnes was given access to certain U.S. MLS data for an earlier engagement, he didn’t use any of this U.S. data to help to qualify his statements for these proceedings.

Another issue that was dealt with was that of “free-riding”, where if a consumer accesses the information from a specific VOW, there is nothing preventing that consumer from then using the services of a different VOW or broker. Vistnes said that there is no justification in using that excuse to restrict VOWs or their access to the MLS data because the brokers who want to operate as a VOW say they are not concerned with free-riding.

He said his research shows that VOWs want to offer that information, and that they believe offering it may very well translate into business for them down the road.

“TREB is causing the problem to the VOWs and pushing them out of business,” said Vistnes, adding that these brokers want to offer the service and data because it costs them nothing to have consumers look and educate themselves.

“Even if it takes a year, three years or five years, the payoff is still attractive to (these VOWs),” said Vistnes.

He said that another key question the panel needs to consider is, if full-informational VOWs are not allowed to exist, are consumers better or worse off?

“For those consumers who want to move their business to a different broker, there is still a consumer benefit,” he said. “It would still be harmful to the free-rider consumer to not get that information.”

Late in the afternoon, former TREB CEO Don Richardson was called to the stand by TREB counsel Donald Affleck. Richardson described the role of TREB and indicated that operating the MLS system absorbs about half of TREB’s total budget, in the range of $7 million to $8 million. It also involves the purchasing of data from a third party.

Richardson said agreements are in place to provide its members with specific information from the Municipal Property Assessment Corporation and Teranet, Ontario’s exclusive provider of online property search and registration data.  This includes validation of homeowners’ information, sales data and transfer transaction records across the province.

Richardson is expected to resume his testimony Tuesday morning when the Ottawa portion of the hearing resumes.

18 COMMENTS

  1. From time to time we hear the media being accused of sensationalism. However, what defines sensationalism beyond its basic definition: “the use of shocking details to cause a lot of excitement or interest”? When we expect something to be said, or a particular accusation to be made can we still consider the statement as sensationalism? Consequently, as it pertains to the headline of this subject article, to what extent did real estate industry members expect the headline: “TREB is “significantly reducing competition” Tribunal told”? My answer to this is: that we definitely should’ve expected the accusation, but that as a headline to this article, it was sensationalism.

    We need to understand that the Competition Bureau of Canada is supposed to be working within the framework of our Competition Act. As it pertains to the current matter before the Competition Tribunal the Bureau’s Application was filed pursuant to Competition Act Articles 79 (1) and (2). Consider Article: “79 (1) (C) the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market,..” The key word in the aforesaid is the word: “substantially”. The word: significant, is a synonym of the word substantial — they essentially have the same meaning. The Competition Bureau’s case is resting heavily (if not exclusively) on them being able to prove a SUBSTANTIAL negative effect on competition, as a result of TREB’s policies. We absolutely should have expected the accusation, as without it the Competition Bureau wouldn’t have set up its tent in the first place!

    I believe that the Competition Bureau’s counsel John Rook inadvertently conceded defeat when he said the following at day two at the Tribunal: “VOWs are at a competitive disadvantage and will not be able to break into the red-hot, yet cutthroat GTA market.” The aforesaid statement by Mr. Rook is an outright admission that it simply isn’t conceivable that TREB’s policies have substantially reduced competition in their market, and that furthermore TREB’s policies have precisely done the opposite: they have substantially increased competition! In addition, Mr. Rook even further acknowledged TREB’s success when he clearly implied that he didn’t expect such strong competition (in the sense of broker’s services) would occur in a “red-hot, yet cutthroat GTA market!” Clearly Mr. Rook was implying that a “red hot” market should normally have a negative effect on competition among brokers who want to offer their services — instead of what is the case in the Greater Toronto Area.

    Since Mr. Rook, apparently, expects higher levels of brokerage competition in slower market places, how can we not see his Tribunal comment, as it relates to current levels of competition in the Greater Toronto Area, as potentially being a broader endorsement of organized real estate’s system’s — when we follow a similar approach to the one that is used by TREB?

  2. “In addressing the tribunal panel’s question of substantiality, Rook asked if Vistnes [Gregory Vistnes — witness for the Competition Bureau] considered the lessening of this competition substantial. Vistnes replied that he did because, in part, there was evidence that consumers wanted to see the information that VOWs want to deliver.”

    It’s remarkable that Mr. Vistnes suggested there is “evidence”, and if it exists what is said evidence?

    In any event, let us consider an example of the kind of “information” that a VOW (Virtual Organization Website) may display openly to its customer’s (consumers). A full-blown VOW can display even: ten consecutive years of the municipal property tax assessments for every property listing — including those of competitors. So, what is the potential value to a real estate consumer having access to this type and volume of unfiltered information? Assuming these assessments show a healthy increase from year one, to year ten, that could be a positive indicator to a prospective buyer, in an equity sense, but this is historical information. On the other hand, a prospective buyer might look at this same information and think that if the property value increases at the same rate for the next ten years, their income isn’t likely to keep up with maintaining the property, and as a consequence they are scared out of the market. In other words, it is entirely possible that a prospective buyer (customer) could be influenced in the present, by long past realities of the market — in the absence of Registrant or Practitioner counsel. One of the regular contributors to REM has been critical in a general sense of home price levels in Ontario, as being too high as a result of home-buyer’s not receiving the best advice. Would it not it be a reprehensible, if prospective home-buyer’s choose to stay out of a current real estate market because they wrongly interpret open information, in the absence of counsel?

  3. …perhaps I’m a little naïve, but can someone explain to me what information MLS has that isn’t available for public consumption from Land Registry (ON), Land Title (BC), etc.?

    • John,

      If the information at the Land Registry was just as valuable and accessible to consumers, as the real estate data that is made available on a VOW (Virtual Organization Website) to its customer’s, do you think the creator or owner of a VOW would be dumb enough to sink a large amount of money into the creation and operation of a VOW? John, you’re more than a little naive!

      • Alan, my question was, “can someone explain what information MLS has that isn’t available for public consumption from Land Registry?” I’m just trying to understand where the value is to VOW’s.

        • John,

          Your question was fundamentally addressed in an exchange between the Chief Justice and Don Richardson, as reported here on REM. As a REALTOR you should avail yourself of your managing Broker, if you’re having difficulty with any of this.

        • John, First you need to understand Virtual Office Websites are not what the CB is confusingly discussing in this case. TREB apparently has not presented what VOWs are and are not.

          The CB and their witnesses are discussing something totally different to what a VOW is. The CB is actually discussing a database which could be accessed online by virtually everyone. That is not now nor can be found anywhere in history as being a VOW.

          I operated a VOW for 10 years and it served my CLIENTS well. I was able to provide information to my clients directly to them online while still providing the oversight they needed to interpret what I was giving them.

          What is being discussed by the CB is information being supplied without Registrants meeting their obligations under REBBA ( in TREBs case). That is not only impossible but simply an irrational discussion.

          So you cannot discuss value of a VOW unless you start at a point of reference based in fact and truth. That is something these 3rd party tech companies seeking to operate businesses outside of REBBA fail to understand. Too bad TREB did not simply present a rebuttal to this case based on historical facts and by educating the CB on what a VOW actually is.

  4. This statement is either misquoted or just wrong –

    TREB and indicated that operating the MLS system absorbs about half of TREB’s total budget, in the range of $7 million to $8 million. It also involves the purchasing of data from a third party.

    TREB’s total budget is $35 to $40 million – IT is about $10 of the budget so this $7 million would be over HALF of the IT budget but only 20% of the total budget.

    Facts are important. You can confirm with TREB or check their annual report.

    • I’m not going to address the statement made to the CB or dollar amounts however, the IT expense would not include in-house salaries for maintaining and operating the board’s MLS sysytem as that would be reported within salaries and benefits. The two combined would be the operating costs specific to MLS IT.

    • What is most interesting about this subject is, once again, what is the relevance of the question in the context of the Competition Commissioner’s Application(s) before the Tribunal?

      The Commissioner is claiming that VOW Brokerages are so efficient that consumer’s can look forward to potential big savings. The following is an excerpt (item) from the Competition Bureau’s, Commissioner’s, original application, to the Tribunal:
      ” 23. The efficiencies realized by VOW brokerages may be passed on to consumers in the form of price competition, through such means as commission rebates….” It is important to understand that no factual costs or even estimated costs of operating a VOW accompanied the aforesaid claim.
      Since the obligation is on the Commissioner of the Competition Bureau to prove their allegations, why wasn’t the focus on what it would cost to run a full-blown VOW (Virtual Organization Website) against what we know it costs to run our more traditional type of system or platform, as would be currently used by TREB?

  5. “Chief Justice Paul Crampton advising both sides that the two biggest questions for hearing panel concern substantiality – how much of an impact TREB’s rules have on its members – and whether privacy, when used as a business justification, is a genuine concern or was thought of after the fact to justify TREB’s position.”

    I would personally ask the question: what was the necessity for an impartial Chief Justice framing his statement the way he did, when he did not stop his following sentence, attributed to him, as per the following: “…and whether privacy, when used as a business justification, is a genuine concern [when he went further by adding on] or was thought of after the fact to justify TREB’s position.”?

    However, as it relates to the question or merits of “privacy” I find it interesting the position that the Company that the Competition Bureau’s expert witness: Gregory Vistnes, Vice-President of U.S.-based Charles River Associates works for, has, on this very subject. The following is an excerpt from the Charles River Associates, Privacy Statement, as available online:

    “…When CRA does process personally identifiable information on its own behalf, CRA conforms to fair information privacy practices, including notice, choice, consent and control, fairness and integrity, as provided by applicable industry and legal standards.”

    So, we must ask ourselves, if organized real estate (TREB included) was encouraged and entitled to abide by a Privacy Statement that contained any of the elements of the above quoted Privacy Statement, would the Chief Justice Paul Crampton have even asked: “..and whether privacy, when used as a business justification, is a genuine concern or was thought of after the fact to justify TREB’s position.”?

  6. This is an exceedingly important issue. I believe the Competition Bureau just does not understand how real estate works, nor have they ever. It is just plain wrong to give away our MLS data. Of course we do not want everybody and his dog to have access to our sold information. The Bureau keeps trying to infer that the Toronto Board is lessening competition. Is that wrong? I do not think so, as companies all over the world seek to have a competitive advantage in their business.
    As an industry we need to present a better case to the Competition Bureau. Much better. And do not cave in and offer a settlement. The real estate industry has diligently worked for decades to develop a fantastic system. We do not need to give everything away. Other companies such as Esso or Pepsi or any large company do not give free access to their data, nor should they. Moreover the board is a member based institution. I would say to give the Competition Bureau a much clearer view of how the real estate industry works.
    Litigate and keep litigating. Stand up and be counted.

  7. If TREB loses this case, the solution is simple; wind-up MLS as it is registered and start a new system that allows everybody, with a discretionary application of judgement being employed, to join (for a fee including ongoing dues ‘plus’ a small user fee for every transaction…user fees to be determined by Realtor users via referendum after they have signed up within a thirty-day time-frame). TREB would determine who does or does not qualify to be a contributing partner. Highjackers/skimmers not welcome. TREB should start working on this now.

  8. “Vistnes [Gregory Vistnes] spent most of the day on the stand. He said in his opinion, TREB has substantial market power and is exercising its market power to lessen competition. To illustrate his point, he said that a broker who does not have access to the MLS system effectively cannot compete in the real estate market. So, because TREB has control over who can access the MLS data and how, it essentially gives TREB the power to decide who can compete and who can’t.”

    Consider the following sentence from quote attributed to Mr. Vistnes: ” So, because TREB has control over who can access the MLS data and how, it essentially gives TREB the power to decide who can compete and who can’t.” We need to consider if the aforesaid statement isn’t simply disinformation — because the real estate industry is Provincially regulated, and as such it is really the Province who holds the power that Mr. Vistnes is trying to attribute to TREB, in his statement at the Competition Tribunal. TREB can’t prevent a legally established Real Estate Brokerage from having access to its data, and consequently can’t decide who can compete and who can’t. Furthermore, the “how” in terms of the manner in which TREB’s data is accessed by a Brokerage isn’t at issue; what is at issue, is: “how” a VOW Brokerage displays said data once they’ve gained access to it. Reader’s need to take note of: “the spin”!

    Consider the following from this article attributed to Mr. Rook: In addressing the tribunal panel’s question of substantiality, Rook asked if Vistnes considered the lessening of this competition substantial. Vistnes replied that he did because, in part, there was evidence that consumers wanted to see the information that VOWs want to deliver.” We should remember that the Competition Bureau of Canada’s lawyer (Rook) is already on the record at the Tribunal as regarding the Greater Toronto Area market as being a: “…cutthroat GTA market.” However, even more to the point is the question of whether the Competition Bureau of Canada isn’t really trying to define or turn what is a “service or Agency issue” into a Competition issue.

    Should Canadian’s really accept that the kind of excessive competition that can give rise to a “…cutthroat GTA market.”, is something that the Competition Bureau of Canada isn’t obliged to not further incite?

    We should remember that the public can have the kind of direct access to our industries data that is being discussed here or advocated for by the Competition Bureau of Canada, simply by Registrants or Practitioner’s being able to provide Consumer’s with their pass-codes to our internal industry databases, on a limited basis. Integral to this question is: should mere Customer’s have this kind of access as opposed to only Clients? Also, should the Competition Bureau of Canada prevail, it won’t mean just another type of competitor, it will mean a new standard for an entire industry — ergo it would mean, that the Government of Canada is dictating to a National Industry how best for us to serve all, Canadian, real estate consumers.

    The nature of the Competition Bureau of Canada’s recent interventions into organized real estate should cause us all to question what “self regulation” is supposed to mean to our industry — if the Competition Bureau of Canada is going to attempt to dictate to organized real estate the manner in which we must share our data with Customer’s or Client’s. In my opinion, how we share our data isn’t severable from the subject of Agency Representation, and the subject of Agency Representation is a Provincially regulated matter.

  9. Does anyone point out that the MLS system was built by fee-paying Realtors and is paid for in full by Realtors who are licenced to practice, and have specific rules and regulations to follow and fees to pay? Does nobody at this Tribunal get it? Why should we allow access to these other “brokers” who have not paid into this system or are not paying MLS fees to use it? I don’t understand why this isn’t first and foremost our argument.

    • Diane,

      The VOW Brokerage will pay to have access to the data, the same way a, non-VOW, traditional Brokerage does. However, the difference is in how the VOW (Virtual Organization Brokerage) shares the data. A traditional Brokerage will indirectly share its access to data, for the most part, with Clients and to a lessor extent with Customers — primarily to service consumer’s who have made a direct contact. A VOW provides direct access to the data (notwithstanding a terms use) even to Customers, in the hope that the Customers will stick around and become Clients. Consequently it’s really a misnomer to suggest that the VOW concept is about consumer’s — it’s really about the VOW and its desire to attract new Clients.

      For the Competition Bureau of Canada to concern itself with how organized real estate: Registrant’s, Practitioner’s or Brokerages attract new Clients, beyond our ability to charge various rates of commission, is absolutely bizarre — when it’s grossly evident that there is ample competition already, and it is just as evident that ours is an industry that really needs to compete through increased professionalism: competence and ethics, because the cost of the absence of the aforesaid can be immeasurable!

  10. Great! 42,000 will operate a vow
    The service is not the distribution of data; its the problem solving and presentation of solutions.

    Agents need to provide better improved services. That’s why I added Matterport for non local buyers to see my listings.

    • I don’t know if all REM participants know that if you tap on the red print commenter name the smartphone mobile screen flips to the Disqus profile i.d. of the commenter, and from there you can see other posts the commenter has made in other forums, sometimes with interesting results, such that here it shows a link to the URL for Matterport, that then provides a screen that says Matterport is not IOS mobile friendly,

      Check it out. Many people use their smartphones exclusively. Many business and agent site URLs are not mobile user friendly.

      Do agents cross-check their own personal or office web urls to see what lands on the mobile screens of their would be buyers and sellers?

      Respectfully
      Carolyne L 🍁

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