Canadian Realtors are restricting consumer choice and limiting the scope of alternative business models, the Competition Bureau of Canada has reportedly concluded after wrapping up a two-year investigation and issuing proposed remedies to a trade association.
The Bureau wants the Canadian Real Estate Association (CREA) — Canada’s version of the National Association of Realtors — to drop a rule that prevents Realtors from placing for-sale listings in the national Multiple Listing Service (MLS) system without providing other services, CREA President Dale Ripplinger said in an Oct. 29 letter to members.
Ripplinger said Canadian regulators also want CREA to drop a rule that prohibits listing the seller’s name and contact information in the public remarks section of the MLS or on Realtor.ca, the Canadian equivalent of Realtor.com.
The bureau reportedly also wants CREA to drop a rule requiring that the listing Realtor receive and present all offers and counteroffers to the seller.
If CREA does not make the recommended changes to its MLS policies, the Competition Bureau will take the matter before the Competition Tribunal, a quasi-judicial body that can issue administrative monetary penalties and prohibition orders, Ripplinger said in the letter.
Ripplinger said CREA’s Board of Directors is pursuing a settlement agreement with the Bureau, subject to support by CREA’s Realtor members.
Greg Scott, a spokesman for the Competition Bureau, said that because the letter was "a communication between the president of CREA and the membership and not sent to us directly, it would be inappropriate for us to discuss its contents."
But Scott said the Competition Bureau’s concerns about restrictions imposed by CREA on the MLS system date to 2007.
"We have complaints from Realtors that the CREA restrictions require consumers to pay for services that they do not want or need so their Realtors can list their homes on the MLS," Scott said in an e-mail to Inman News. "The Multiple Listing Services account for the vast majority of real estate transactions in Canada and (the MLS system) is controlled exclusively by CREA."
In March 2007, the Competition Bureau — Canada’s equivalent of the U.S. Federal Trade Commission and U.S. Justice Department’s antitrust division — served CREA with a court order seeking documents and other information as a part of a formal investigation (see story).
Around the same time, the Bureau was meeting with limited-service brokers in the U.S. — a practice that apparently continued into this year (see story).
In his letter to members, Kipplinger said the Bureau has completed its inquiry, and met with CREA in October to share its conclusions and proposed remedies.
CREA agrees with regulators that the marketplace and competition should dictate what business models exist, Ripplinger said, but disagrees with their conclusion that its rules create restrictions or barriers.
CREA maintains that although Canada has one MLS system that operates under a national trademark, more than 100 MLSs are locally owned and operated, and there are no restrictions on business models.
After Ripplinger’s letter became public, CREA denied as inaccurate a Canadian media report that the group had agreed to allow sellers to place listings in the MLS.
A CREA spokeswoman, Alyson Fair, reiterated the group’s position that the MLS is a system "for our members … only."
The Bureau has a "fundamental misunderstanding" about the way the MLS rules are applied to operating the system, which is the central focus of ongoing discussions, Fair told Inman News.
She said the group hoped to have the framework of a settlement in place by Dec. 11, when CREA’s board of directors meets next.
Without commenting on the discussions with CREA, Scott said that in general, when the Bureau identifies a potential violation of Canada’s fundamental competition law, the Competition Act, it "is prepared to work with organizations to reach a voluntary resolution that will fix the competitive problem."
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