Countering the contention by the Competition Bureau that CREA’s MLS access rules were anti-competitive has consumed most of CREA president Georges Pahud’s term in office. Pahud recently spoke with REM senior editor Kathy Bevan about the Consent Agreement between CREA and the bureau, resolving the MLS access dispute, and his expectations for future interactions with the bureau. An edited version of their conversation follows.
REM: What do you think CREA’s relationship with the Competition Bureau will be like going forward, now that the Consent Agreement has been ratified?
Photos by Jennifer Gauthier
Pahud: I’m hoping that we will have a working relationship with the bureau that does not involve the exchange of pleadings. That we can actually talk and work through some of the issues that are of concern to the bureau or are of concern to us or our members. It would be nice to be able to go and actually have conversations and not litigation. So I’m hoping we can do that and I believe our internal counsel is contacting the bureau at the moment on matters that we will need to deal with.
There’s government-changed legislation, there are regulations and then there is enforcement of that legislation or those regulations. That’s when you need to have a communication channel with the regulator – in this case the bureau – so that you can understand how they interpret legislation and how we might interpret it and how we can make it work, without resorting to hugely expensive litigation processes.
REM: The dues increase that CREA’s membership voted in favour of at your Special General Meeting in October included $5 per member for the Legal Defence Fund – is CREA growing this fund in anticipation of further legal action from the bureau?
Pahud: We’re not growing the Legal Defence Fund, we’re replenishing it, as things have been fairly expensive so far. We have other legal issues besides the bureau – this fund doesn’t apply only to the bureau. We also provide funds to members or to associations or to CREA to defend or litigate issues of national interest. We have ongoing legal costs on other matters beside competition, such as trademark protection and other issues.
And every agreement that we sign with suppliers, anything you do today requires the involvement of lawyers – fortunately or unfortunately – so legal costs are an ongoing thing. As well, there is the educational aspect of it, where we spend money on lawyers. We have a compliance process that we are following and that costs money, with lawyers involved as well. We also have other issues such as FINTRAC that involve legal costs.
REM: It’s now been a few weeks since the Consent Agreement was ratified at that Special General Meeting – what reaction have you been hearing from Realtors on the street?
Pahud: Members continue to be frustrated when they read in the press that the public can post their listings on MLS without a Realtor – that’s not part of the agreement and was never the intention. MLS continues to be a member-to-member service. And only members of CREA can use our trademark MLS.
This agreement dealt with CREA’s and boards’ and associations’ rules – it did not deal with members’ own business models. This agreement does not compel members to adopt any particular business model or charge or not charge whatever fees. It simply addresses the commissioner’s concerns – and we disagreed with those concerns – that CREA’s rules prevented or discriminated against mere postings or mere postings business models. We disagreed with that. This is part of the Consent Agreement; this is in the Consent Agreement.
CREA wants to be a good corporate citizen – we appreciate the need for the bureau and we’re committed to the rule of law and to making sure that everyone in our profession obeys the law. So we came to this new Consent Agreement, recognizing that reasonable people disagree and reasonable people agree to disagree. And then you work it out.
I think the bureau came to that conclusion as well – that we’re reasonable people, we always wanted to negotiate, we were always open to negotiations, we always wanted to discuss and continue negotiations with the bureau. It was the bureau that ended the discussions early on in the year, not us.
REM: What was the ‘tipping point’ that enabled the two sides to get back together and hammer out an agreement in September?
Pahud: The tipping point – if there was such a thing – came when the executive committee had discussions in July and we were going through some of the numbers and the effort and energy that was being expended on this file. We thought we were so close in January – now that things had cooled off a bit, we said, “Why don’t we see if we can go back to the bureau and see if we can work something out?”
Essentially, in our minds there were two parts to this: there was the cost of the litigation – it was hugely expensive; and then there is what I referred to as the aggravation cost. The aggravation costs are on different levels. One of them is that it permeates the entire organization, particularly at CREA, and it drains the resources from just about every department, because you’re so focused on it. It also becomes the focus of every directors’ meeting, the focus of every meeting that you go to. And then it flows through to local boards and provincial associations, because the Competition Bureau is always there and the thought of what is going to happen. Then the aggravation cost eventually flows to our members, through generally negative media reports – the negative media impacted on our members.
This agreement is first and foremost for the benefit of our members. They are the people we always kept in our minds when we were negotiating this – how does it affect the member? The membership never left our side, never left our mind. People have to remember, even if all members don’t, that this agreement was negotiated by Realtors. There were five people on the executive committee – four of them are Realtors. And those four Realtors sold over 300 properties last year. The other three did – I only sold two. But they know what the members feel about what it’s like to be doing the work.
So the tipping point, if you would – among a number of things – was the cost in dollars and aggravation. That, and saying, “We need to find a way to do this.” We’re Realtors, we solve problems – we help people with their problems – so surely we could help ourselves? And we did.
The third part of it is that, on all our other files, we have a very good relationship with the federal government, whether it’s FINTRAC or employment insurance, or whatever. And we wanted to go back to having a working relationship with the bureau, because we need to have that working relationship. We needed to get past this dispute.
REM: Is there any concern that the bureau now will focus on other issues – such as VOWs for example – or focus on individual boards rather than CREA?
Pahud: The bureau’s focal point was mere postings, because they felt that the rules prevented the entry of innovative and competitive business models into the business, or their ability to remain in the business. With this Consent Agreement, the boards – if they want to keep their MLS licences, their trademark, use of “MLS” and “Realtor” and be members of CREA – have to abide by the terms of the Consent Agreement. They have to get back to us and confirm that they have reviewed their rules and that their rules do in fact comply with the Consent Agreement.
So I have no reason to believe the bureau would set their sights on the boards, unless some board has done something a member complains about to the bureau, and the bureau decides to investigate one board on a specific issue. But that might happen anytime. I can’t imagine the bureau saying, “Oh well, now let’s just go investigate all the boards, or pick on five boards just to see if they comply.” I doubt that will happen, but I don’t know.
VOWs are an issue that will be coming up again. Vancouver has VOWs and it’s not particularly a big deal – some boards are more concerned about VOWs than others. It’s a discussion we had with the bureau at one point and that the bureau left off. It’s one of the things that we’ll want to have a conversation with the bureau about. Certainly, VOWs were the basis for a dispute in the U.S. between the National Association of Realtors and the Department of Justice and that was resolved by way of their version of a Consent Agreement. I don’t know how important VOWs are here – I don’t know how widely they are used.
REM: What communications has CREA been sending out to boards and associations to help them comply with the new Consent Agreement?
Pahud: Template wording has gone out that fairly much mirrors the Consent Agreement and contains the language of the new agency pillar.
We’re also going to have our internal counsels addressing a number of boards and associations and have started providing courses in Competition Law, about changes in that law. We’re looking at webinars, we’re sending out literature explaining the Consent Agreement, we may create podcasts and DVDs – some electronic means of communication to communicate to our members. We have to be vigilant and our members have to be vigilant.
REM: Do you feel relief or regret that the dispute with the bureau came to a head during your term as CREA president?
Pahud: I have no regrets at all. Relief? Yes, absolutely. But realistically, it’s been a fascinating time – not necessarily something one would have wished for. But on the other hand, it’s been hugely interesting. It also gave me some opportunities to travel across the country and meet up with members across Canada, from the west coast to the east coast. And I continue to be amazed at – shouldn’t be amazed at – the generosity of spirit that Realtors display across the country. The contribution to local economies, the commitment to their communities is incredible. Their warmth and hospitality towards me was incredible – I’m very grateful for that, it’s an opportunity I might not have had otherwise. And I’m grateful for the support that I’ve received. I know our communication strategy was frustrating to many people, but we had to make a choice between the need to preserve our legal position and our wish to communicate with our members – we could not satisfy both.
That’s the position we took – we decided to take the high road. We had the utmost respect for the courts and we were not going to litigate this in public.
REM: Did that strategy contribute to the agreement finally being signed?
Pahud: I think that our strategy has worked extremely well towards getting us to a Consent Agreement. Had we adopted a different strategy, I’m not sure we could have gotten a Consent Agreement – we probably would have ended up in court. That’s speculation – I don’t know – but if I had to do it all over again, I would probably follow the same path.
I do want to stress that this has been a team effort, not so much on the executive committee but also the Board of Directors. Their involvement was limited due to the need for confidentiality and utmost discretion, but their support has been invaluable. And our staff has been unbelievable – their commitment, their effort, their work ethic, their advice. The quality of people I’ve been working with is almost unparalleled anywhere and I’ve worked with wonderful people. In most organizations, if not all, across the country, I found the staff dedication to be amazing and our staff at CREA has been exceptional.
Looking forward, I continue to believe that Realtors make real estate a great investment. And I’m confident that our members will continue to thrive and will continue to help the Canadian public. We’re such important factors in the Canadian economy – I don’t think that will change.
Hopefully our major roadblocks or irritants are out of the way and we can go on doing in future what Boards of Directors should do – anticipate the future and manage the operations from a high level, rather than having to delve down to the day to day routine of litigation.
