The Competition Bureau says it has obtained a court order as part of an investigation into potential anti-competitive conduct by the Canadian Real Estate Association.
The bureau said Thursday its investigation is looking into whether CREA’s rules discourage buyers’ realtors from offering lower commission rates or whether they affect competition in other ways.
It’s also looking into whether CREA’s agent co-operation policy makes it harder for alternative listing services to compete with the major listing services, or gives larger brokerages an unfair advantage over smaller ones.
The court order requires CREA to produce records and information relevant to the investigation, the bureau said, adding the investigation is ongoing and there is no conclusion of wrongdoing at this time.
CREA’s membership includes more than 160,000 real estate brokers, agents and salespeople.
The association said it’s co-operating with the bureau’s investigation.
In a statement, CREA chair James Mabey said the organization believes its rules and policies are “pro-competitive and pro-consumer” and help increase transparency.
Court documents show the bureau’s inquiry began in June, as the competition commissioner said he had reason to believe CREA engaged in conduct impeding the ability of real estate agents to compete.
The court documents note CREA owns the MLS and Multiple Listing Service trademarks and owns and operates realtor.ca, which real estate groups use to list homes for sale.
Websites like realtor.ca are where the public can view home listings, while MLS systems contain data that’s only accessible to agents such as additional information on listings, sales activity in the area and neighbourhood descriptions. Some of this data is not publicly available for privacy reasons.
Access to the MLS system is a perk offered to members by real estate boards and associations.
The Competition Bureau in recent years has been reviewing whether the limited public access to these systems stunts competition or innovation in the real estate sector.
Property listings on an MLS system must include a commission offer to the buyers’ agent, and when a listing is sold, often the agent for the buyer is paid by the seller’s agent, according to the court documents.
They allege these rules reduce incentives for buyers’ agents to offer lower commissions because if buyers aren’t directly paying their agent, they may be less likely to select an agent based on their commission rate.
The bureau alleges the rules also incentivize buyers’ agents to steer their clients away from listings with lower-than-average commissions.
The documents also say CREA’s co-operation policy, which came into force at the beginning of 2024, favours larger brokerages because of their ability to advertise to bigger networks of agents.
The policy requires residential real estate listings to be added to an MLS system within three days of them being publicly marketed, such as through flyers, yard signs or online promotions.
The documents also allege the co-operation policy disadvantages alternative listing services as it’s harder for them to compete on things like privacy or inventory.
The Competition Bureau’s latest investigation comes after the U.S. National Association of Realtors reached a major settlement in March after facing numerous lawsuits related to rules on how agents set commissions.
As part of the deal reached, the association agreed to not require that brokers offer upfront compensation to buyer agents, leaving it open for sellers to negotiate commission.
Canadian real estate associations have also faced past pressure from regulators on their practices.
The Competition Bureau successfully forced the Toronto Regional Real Estate Board to allow Multiple Listing Service data to be accessible to the public through some websites, which must be password-protected and are typically open to an agent’s clients or site subscribers.
Last year, the Competition Bureau said it was investigating whether the Quebec Professional Association for Real Estate Brokers’ data-sharing restrictions were stifling competition in the housing market.
It obtained a court order in February 2023 related to the ongoing investigation, looking into whether QPAREB and its subsidiary, Société Centris, engaged in practices that harm competition or prevent the development of innovative online brokerage services in the province.
— With files from Tara Deschamps
This report by The Canadian Press was first published Oct. 3, 2024.
