Competition Tribunal Finds Toronto Real Estate Board Engaged in Abuse of Dominance

by Blake, Cassels & Graydon LLP
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SUMMARY

  • Last week, the Competition Tribunal (Tribunal) issued a summary of its decision in the Commissioner of Competition’s (Commissioner) long-running abuse of dominance case against the Toronto Real Estate Board.
  • This case has broadened the scope of the type of conduct that can constitute an “abuse of dominance” under Canadian law, but the limits of what constitutes abusive conduct have yet to be clarified.

IN DETAIL

On April 27, 2016, the Competition Tribunal issued the outcome and a summary of its decision in Commissioner of Competition v. Toronto Real Estate Board, holding that TREB had abused its dominant position and lessened competition substantially in the supply of residential real estate brokerage services.

TREB is a trade association of real estate brokers in Toronto that operates a password-protected Multiple Listing Service (MLS) to which its members have access. TREB imposed certain restrictions on its members’ use of information from the MLS, including how it is publicly disseminated. The Commissioner brought an application against TREB in May 2011, alleging that TREB “controlled” the supply of MLS-based brokerage services in Toronto and that its restrictions prevented brokers from innovating in the types of brokerage services they were offering (in particular, preventing the operation of Internet-based brokerages). The Commissioner alleged that these restrictions constituted an abuse of dominance.

TREB took the position that because it did not compete with its members (i.e., the MLS was an input to its members, but not competitive against its members), any restrictions TREB took that affected its members could not be “directed at a competitor” — an important requirement of the abuse of dominance provision under an older Canadian case. In April 2013, the Tribunal agreed and dismissed the Commissioner’s application for this reason. However, the Commissioner successfully appealed in February 2014 to the Federal Court of Appeal (FCA). The FCA’s decision held that to constitute an anti-competitive practice, conduct need not be directed at a competitor of the person alleged to have abused its dominance. Instead, the abuse of dominance provision was capable of broader application than argued by TREB. The FCA sent the case back to the Tribunal for further hearing.

While the Tribunal has ruled in favour of the Commissioner, its decision is not yet publicly available. The summary of the decision released by the Tribunal confirms the Tribunal’s conclusions that (1) TREB controls the supply of MLS-based brokerage services in Toronto; (2) TREB’s restrictions constitute anti-competitive acts directed at a competitor (even though TREB does not compete with its members); and (3) TREB’s restrictions are preventing competition substantially, particularly as it concerns non-price competition (i.e., impact on innovation, quality and range of services offered).

Interested observers will be keen to review the full decision when it is released. Potentially the most important issue the decision may address is the limiting principle of what constitutes an anti-competitive act, a question that was generally left open by the FCA. The Tribunal may have ruled narrowly, finding that although trade associations do not compete with their members, their circumstances are unique because a trade association is composed of and controlled by its members. Alternatively, the Tribunal may extend the scope of what constitutes an anti-competitive act beyond these unique facts. The decision may also offer guidance about how innovation and other qualitative elements of competition are to be evaluated under Canadian law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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