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REAL ESTATE MLs fight heats up Competition Bureau strikes back at real estate agents' 'anti-competitive rules.' BY PAUL BRENT T he way Canadians buy and sell billions worth of real estate could change drastically if the Competition Bureau has its way. The federal com- petition watchdog has applied to the Competition Tribunal to strike down the "anti-competitive rules" of the Canadian Real Estate Association, which owes its industry dominance to its control of the national Multiple Listing Service. CREA's grip on the MLS system is the basis for the bureau's challenge: the MLS system is in reality the only way to reach a wide audience of potential buyers, but using the system comes with a series of strings attached such as mandating that agents using the system must agree to a minimum of services delivered to consumers. "Selling a home is one of the largest financial transactions that most Canadians make in their lifetime," stated Commissioner of Competition Melanie Aitken when the bureau launched its appli- cation last month. "Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options." The CREA described the commis- sioner's application as "surprising and disappointing" in a statement from Dale Ripplinger, the association's past presi- dent. "We do not agree with the bureau's position that certain CREA rules are anti- competitive, either as a matter of fact or as a matter of law. CREA's rules allow for innovative business models and provide a broad range of choice for consumers." Neither the CREA or Competition Bureau agreed to be interviewed about the dispute, which appears headed for a tribunal decision. The bureau's challenge is focused on the rules imposed by CREA on agents who list properties on MLS. More than 90 per cent of real estate transactions in Canada make use of the system, which includes important information available only to CREA members. Before listing a property on MLS, agents must agree to comply with CREA's restrictions on the service options they provide to Canadian consumers. Those minimum services typically carry a commission totalling five per cent of the sale price of the property. The bureau contends that CREA's rules governing agents' access to MLS prohibit lower-cost options for consumers and instead require them to buy "a pre-deter- mined set of additional services from a real estate agent" giving examples such as the presentation of offers and negotiation of a final deal. "The Competition Bureau's action will be a test of the abuse of domi- nance provisions of the Competition Act," says Subrata Bhattacharjee of Heenan Blaikie LLP. "It would appear that the commissioner is seeking to have the Competition Tribunal issue a remedial order with respect to CREA's structure and operation of not just the MLS, but its gen- eral rules surrounding access to MLS." He notes various types of anti-com- petitive activities carried out by dominant firms "are not listed exhaustively" in the Competition Act. "So the general view is www. C ANADIAN Law ye rmag.com M AY 2010 23 JEFF SZUC