Canadian COMPETITION LAW

November 4, 2010

The Consent Agreement, which represents the settlement between the Competition Bureau and The Canadian Real Estate Association, has been filed with the federal Competition Tribunal.

This marks the conclusion of more than three years of investigation and negotiation between organized real estate in Canada and the Competition Bureau.

The case, though settled, also represents one of the landmark abuse of dominance cases in Canada, given that there have been less than ten contested abuse cases since the modern Competition Act was introduced in 1985.

Unfortunately, however, the settlement means that many legal questions remain about the scope and application of Canada’s abuse of dominance provisions.  These include the definition of relevant markets (in this case, in the context of a trade association that did not provide any of the services in which its dominance was alleged), what legitimate business justifications may offset allegations of anti-competitive acts (one of the most serious unanswered questions raised by the last contested abuse of dominance case – Canada Pipe) and to what extent the exercise of intellectual property rights can be unilaterally exercised without raising abuse of dominance issues (in this case, relating to the exercise of CREA’s MLS trade-mark rights).

Some of the key terms of the settlement between CREA and the Bureau include prohibitions on CREA adopting (or enforcing) rules that: (i) prevent members from offering “mere postings” (a listing on a MLS system where a member has chosen or agreed not provide services to their seller client other than merely posting the listing), (ii) discriminate against mere postings, (iii) prevent members from cooperating with other members that offer mere postings, (iv) prevent members from listing a seller’s contact information in the REALTOR-only remarks section of a real estate board’s MLS system or (v) prevent members from negotiating compensation to be paid to selling agents (as long as the offered compensation is not zero).

Interestingly, the Consent Agreement, in force for ten years, also includes restrictions on CREA’s use of its MLS trade-marks.  These include prohibitions on licensing its MLS trade-marks to member real estate boards that fail to amend their MLS rules, in accord with the Consent Agreement, or licensing its MLS marks to member boards that adopt or enforce rules inconsistent with the terms of the Consent Agreement.

The intellectual property related terms in particular bring into high relief the importance of IP (i.e., trade-mark) rights in this case, the scope of the legitimate exercise of which will, unfortunately, remain to be determined in the next abuse case involving allegations of abuse of dominance and intellectual property rights.

For a copy of the Consent Agreement registered with the Competition Tribunal, see: Registered Consent Agreement.

For more regulatory law updates follow me on Twitter: @CanadaAttorney

Comments are closed.