By Kathy Bevan

More questions than answers have greeted the September 30 announcement that CREA and the Competition Bureau have reached an agreement in principle regarding MLS access that may preclude the two organizations facing off in court in April.

Most Realtors have not seen any details of the proposed agreement, even though it is to be voted on at CREA’s annual fall Special General Meeting October 24 in St. John’s. Neither CREA nor the bureau are discussing details in public; in private, CREA executives have been hastening to present the agreement to as many boards and associations as possible prior to the October 24 vote.

CREA has given a number of reasons for its secrecy, as shared below. Both CREA and the bureau have provided responses to some of the questions REM and our readers have been asking (see the comments on our last story) since the announcement.

Although the substance of the agreement remains undisclosed – complete details apparently won’t be made public unless the agreement is ratified on – here’s what has been released so far.

Why isn’t CREA making details of the proposed agreement public, or at least distributing those details to all CREA members for review ahead of its Special General Meeting (SGM) vote on October 24?

CREA – Georges Pahud, president: “The agreement with the bureau will only be final if the members vote in favour at the SGM. Until that time, the agreement is in escrow. In the event the agreement is not ratified, the litigation will continue its course, with tribunal hearings beginning in April… In the meantime, it is critically important not to publicly divulge details, since the agreement is not final and the litigation continues at least until the vote in St. John’s.”

 

Is CREA sharing any information about the proposed agreement with its members prior to the SGM?

Pahud: “We have started and will continue, where practical in the short time between now and the SGM, with detailed presentations to boards and ssociations regarding all elements of the agreement. ”

 

What has CREA publicly stated about the proposed agreement?

While CREA’s executive is not publicly discussing the substance of the agreement, the association’s president did want to clarify a few points that he said had been misrepresented by some members of the media. “The agreement does not grant public access to the MLS system, it remains a member-to-member service,” says Pahud. “Moreover, it does not require brokerages to change their business models. The agreement specifies that boards and associations cannot prevent or discriminate against mere posting business models. CREA has always maintained its rules do no such thing.”

 

If the agreement is ratified by CREA’s membership on October 24, how soon will it come into effect?

Competition Bureau – Greg Scott, senior communications advisor: “Following that ratification, the legally binding consent agreement will need to be registered with the Competition Tribunal. At that point, the agreement comes into effect…we are talking about at most a day or two, but it could be a matter of a few hours.”

 

If ratified by CREA’s membership, will this agreement become a Prohibition Order, similar to the one that the real estate industry had to comply with almost two decades ago?

Scott: “No, this would not be a prohibition order. It would be a legally binding consent agreement. The agreement, if ratified, will eliminate CREA’s ability to adopt anti-competitive rules that discriminate against real estate agents who are hired by consumers only to list or merely ‘post’ a residential property on the MLS. When a matter is contested before the Competition Tribunal, the tribunal can order remedies, such as an order prohibiting a particular behaviour. In this case though, if ratified, we will have a mutually agreeable resolution in the form of a 10-year legally binding consent agreement.

 

If the agreement is not ratified by CREA members, what happens next?

CREA – Pahud: “The agreement with the bureau will only be final if the members vote in favour at the SGM. Until that time, the agreement is in escrow. In the event the agreement is not ratified, the litigation will continue its course, with tribunal hearings beginning in April.”

Competition Bureau – Scott: “While we do not want to speculate about the outcome nor do anything to interfere with the ratification process, we will not withdraw our challenge to the Competition Tribunal until such time as the agreement is ratified.”

John Rook of  Bennett Jones, CREA’s legal counsel, writing on behalf of both the Commissioner and CREA’s counsel, stated to tribunal Madame Justice Simpson that the bureau and CREA “have agreed that the current Orders of the Tribunal in this matter, particularly for the delivery of documents and for the hearing, will not be affected, unless and until the Consent Agreement is registered…(and) jointly request that the Competition Tribunal not take any steps to alter any existing plans in respect of this proceeding, pending further communications from counsel.”

The status of the tribunal hearing is still listed as “ongoing” on the tribunal’s website, with the first week of hearings scheduled to begin in Ottawa on April 26, 2011. CREA was scheduled to serve some of its documents on the commissioner on September 30; on October 29, CREA is to serve the balance of its documents and the commissioner is scheduled to serve her documents on CREA.

 

Why have CREA and the bureau reached this agreement in principle, instead of pursuing a legal settlement through the courts?

CREA – Pahud: “CREA has always been of the view that its rules regarding member board MLS systems do not in any way prevent or restrict a broad range of business models. In CREA’s view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.”

Competition Bureau – Melanie Aitken, commissioner: “Since challenging CREA’s rules, the bureau’s goal has always been to achieve a long-term solution that would strengthen competition in the residential real estate brokerage services market. This resolution, if ratified by CREA’s membership, achieves this goal.”

 

Has CREA had enough time prior to the October 24 SGM to provide adequate notice to its members for a ratification vote to be held at that SGM?

CREA – Linda Kristal, director of communications: “The Notice of Meeting is sent out 30 days in advance of the meeting. Competition issues was one of the items on the agenda that accompanied the notice in September. CREA’s rules provide for short notice of a matter, when required.”

 

Who will be voting on the proposed agreement at the SGM and how many votes will be necessary for ratification?

CREA – Kristal: “The member boards are the voting delegates at CREA meetings. They must be in attendance to vote, either through their own delegates or by way of proxy. The vote on the proposed agreement will be based on simple majority.”

 

What was the basis of the commissioner’s application to the Competition Tribunal that led to the scheduling of a hearing in April 2011?

As posted on the tribunal’s website, Aitken’s application to the tribunal alleges that CREA’s rules regarding MLS access are anti-competitive and “deny consumer choice and stifle competition” and block real estate agents “from offering innovative services and pricing options to consumers.” The bureau alleges that these rules are contrary to section 79 of Canada’s Competition Act, which forbids the abuse of a dominant market position.