Dear Mr. Registrar,
I am writing in regard to the notice of public consultation for commentsFootnote 1 on several proposed regulations, including the Real Estate Services Act, SM 2015, c 45. (the “Act”) and the Real Estate Services Regulation (the “Regulation”). In particular, I am writing to discuss the regulatory framework in Manitoba surrounding the dissemination of certain real estate information, including sold information and other property sales histories, from real estate brokers and agents to clients or consumers. In addition to this submission, I would welcome the opportunity for us to have regular discussions as you develop the Regulation as the Bureau has extensive expertise in examining competition in this industry.
Role of the Competition Bureau
The Competition Bureau (the “Bureau”), as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace. Headed by the Commissioner of Competition (the “Commissioner”), the Bureau is responsible for the administration and enforcement of, among other things, the Competition Act.Footnote 2 Competition empowers consumers and drives businesses to lower prices, improve consumer choice, and increase innovation.
As Canada’s competition expert, the Bureau assists governments across Canada by bringing its competition-focused perspective to support regulatory decision-making. In furtherance of this mandate, the Bureau has recently published the Competition Assessment Toolkit, which is a hands-on guide designed to introduce regulators and policymakers to the concept and practice of competition assessment.Footnote 3 Competition assessment allows governments to explicitly consider the effect that regulations could have on competition, and design regulatory regimes that maximize the benefits of competition in the economy.
Your review of Manitoba’s regulation surrounding the real estate industry provides an excellent opportunity to ensure that consumers in Manitoba benefit from a competitive and innovative marketplace. The real estate industry is an area where the Bureau has been highly active in recent years, in particular, by advancing litigated matters before the Competition Tribunal (the “Tribunal”) and other courts. Most notably, this includes the Commissioner’s litigation against the Toronto Real Estate Board, (“TREB”), which resulted in a favourable ruling by the TribunalFootnote 4 that came into force in 2018 after a final appeal was exhausted before the Supreme Court of Canada. I wish to take some time to discuss this litigated matter as it has direct relevance to the dissemination of real estate information from agents and brokers to consumers or clients.
Commissioner of Competition v. Toronto Real Estate Board
The Commissioner’s case against TREB before the Competition Tribunal as well as other courts centered around the assertion that TREB had abused its dominant position in the market for residential real estate brokerage services. Specifically, the case focused on rules imposed by TREB on members that restricted the use and online display of critical information in the Multiple Listing Service (“MLS”)Footnote 5 such as sold prices.
While TREB allowed its member brokers and agents to share data with clients by hand, email, or fax, it prevented the same data to be displayed online through Virtual Office Websites (“VOWs”), which are secure password-protected online portals where brokers and agents can provide MLS information to their customers and clients. TREB also excluded these sales data from its electronic data feed to its members, limiting their ability to develop new and sophisticated analytical tools on their online portals. These tools would offer consumers an increased understanding of their local real estate market thereby allowing them to make more informed decisions on what is arguably the largest financial transaction for many consumers.
The Commissioner asserted that TREB’s restrictions limited the impact of new and innovative business models and services that were a competitive threat to TREB members who preferred to compete using more traditional business models. TREB’s argument was that these restrictions were designed to protect consumer privacy to comply with federal privacy law and requirements of the provincial real estate regulator.
The Tribunal, which adjudicated this matter between the Commissioner and TREB, ultimately determined that TREB’s privacy arguments were a “pretext” and an “afterthought” used to justify its anti-competitive restrictions. Furthermore, the Tribunal found that TREB’s restrictions substantially prevented competition, including from innovative business models.
Following the Tribunal’s ruling, TREB filed a motion to appeal the decision with the Federal Court of Appeal, which was dismissed. TREB then filed an application for leave to appeal to the Supreme Court of Canada. On August 23, 2018, the Supreme Court ultimately ruled in favour of the Commissioner and dismissed TREB’s application to appeal, meaning the Tribunal order has since taken effect.
While the courts determined that TREB’s restrictions were not motivated by privacy considerations, it is important to note that the courts affirmed the importance of privacy as a legitimate business justification. In addition, TREB was also found to already have the sufficient consent from home buyers and sellers in accordance with the Personal Information Protection and Electronic Documents Act (“PIPEDA”) to display the relevant data, including historical listings and sale prices, through VOWs. Consequently, the Bureau values privacy as both an important public policy objective as well as an important factor in assessing whether the overall character or purpose of an alleged anti-competitive conduct.
Real Estate Outreach
Following the implementation of the Tribunal Order, representatives of the Bureau have been engaging various other players in real estate market across Canada, including real estate boards, to encourage adoption of policies and practices consistent with the TREB decision. These engagements have yielded positive outcomes and I certainly hope to encourage the adoption of business models that could yield greater competition for the benefit of consumers across Canada.
I understand that Manitoba has an unique regulatory framework that limits the dissemination of real estate information, including sold information. In particular, there are certain standard forms that (depending the nature of the properties in question) real estate brokers and agents need to adhere to in the process of assisting a client with the completion of a real estate transaction. My understanding is that these forms contain certain prescribed consents for the collection, use, and disclosure of property sales information that cannot be modified,Footnote 6 and have been interpreted as not being sufficiently broad to permit real estate boards and brokerages to implement revised rules and policies consistent with the TREB decision. This includes for instance, preventing the dissemination of the sale prices of specific properties to a prospective buyer in order to provide a comparative market analysis (“CMA”),Footnote 7 or the display of sold prices for particular properties online.
While I do not have any specific comments on this overall approach of using prescribed forms, it appears that the specific consents provided within are preventing the emergence of new tools and services in Manitoba, that are now available to consumers in many other parts of the country. I encourage the approach taken in Manitoba to be flexible enough as to allow new forms of competition to emerge through revised consents that would permit historical listing information for specific properties to be displayed online (or provided to customers and clients of real estate agents by other means). More generally, the Bureau believes that the overall regulatory framework should not favor or hinder particular business models.
The Bureau recognizes that when crafting regulation there are many different policy considerations that are important beyond competition considerations. I also recognize that the rules restricting the dissemination of sold information from brokers and agents to clients or consumers appear to apply regardless of business model and means of disclosure (for example, we understand that historical sales information for specific properties cannot be disclosed regardless of whether it is done via the internet or by providing the information by hand). That said, I do believe that changes to the regulatory regime can be made that continue to serve both the public interest and also maximize the benefits of competition in the economy for Manitobans.
I hope the above has been helpful in highlighting the Bureau’s experiences in the real estate industry and our motivation for participating in this important consultation. We recognize that you may have additional questions and wish to make ourselves available for further discussions. We strongly believe that by taking this opportunity to incorporate amendments that allow for a more permissible environment with respect to the dissemination of sold information, consumers in Manitoba would benefit from a competitive and innovative real estate market. We look forward to hearing from you on this matter.
Assistant Deputy Commissioner
Monopolistic Practices Directorate