The seventh and final day of the evidentiary portion of the Competition Tribunal hearing between the Commissioner of Competition and the Toronto Real Estate Board (TREB) began in Ottawa Wednesday with the cross-examination of TREB witness and economist Jeffrey Church.
Church spent the morning taking questions from Competition Bureau counsel John Rook, who looked to clarify some of Church’s opinions and cast doubt on aspects of his report.
In one example, Rook challenged a part of the report where Church writes that list prices are good substitutes for solds and pendings since they incorporate market information for the search phase.
How, wondered Rook, could list prices be good substitutes for sold and pending prices in a market like the Greater Toronto Area where he is aware of Realtors who purposely under-list a house price in order to generate a bidding war?
While much of the morning exchange dealt with various related economic questions and statements contained within Church’s report, Rook also questioned him on different occasions about TREB members’ access to the MLS system.
In the first exchange, Rook had Church admit that there was no other MLS or service provider that provided anything close to the level of information available to a TREB member within the MLS system.
Revisiting the issue later, Rook asked Church if he was aware that TREB, from time-to-time, has exercised its authority to require its members to cease-and-desist from activities the board considers contrary to its rules.
“With respect to TREB MLS data, yes,” replied Church.
Rook then asked Church if he was aware that the board wrote to virtual office website (VOW) operators and threatened to cut them off if they didn’t signal they were in full compliance of the board’s rules, to which Church again replied that he was.
“And (the board) did that even when there was no evidence (the VOW operator) was in contravention of the board rules?” asked Rook.
“I don’t know that.”
“Are you aware that one of the companies that was not observing the rules was operated by the president-elect of TREB?” asked Rook.
“I became aware of that.”
“Were you aware during the writing of your report?”
“No,” said Church.
The Competition Bureau’s position is that TREB stifles competition in the GTA’s real estate market by monopolizing the MLS terms of use, with Rook previously arguing that TREB’s hostile disposition towards VOWs stymies innovative Internet services, which hurts both consumers and TREB’s membership.
After Rook was finished cross-examining Church, the panel asked Church several questions to clarify his economic opinions and to help put his testimony into perspective. Chief Justice Paul Crampton asked him whether he thought consumers are materially worse off by not having access to the information in dispute (sales data), to which Church responded “You don’t have it at the VOW, but you have it at the broker.”
After lunch, Sandra Forbes, counsel for CREA, which has Intervenor status, called CREA CEO Gary Simonsen to the stand. Simonsen spent a little time describing CREA’s Data Distribution Facility (DDF), which enables CREA members to easily disseminate up-to-date MLS listing content to multiple websites. Simonsen also gave a detailed, live demonstration of how the realtor.ca website works and the various ways it can be used to find listings or contact an agent.
Once he was finished, Competition Bureau counsel Andrew Little asked a few questions, that focused on the number of people who use the realtor.ca website. It was reported that only three per cent of Realtors access it.
Little also noted that CREA tracked the number of people visiting the realtor.ca website by unique IP address, a set of numbers that represent a unique location identifier of sorts on the Internet. He drew attention to the fact that there was a decrease in the number of people who visited the realtor.ca website between the first four months of 2015 versus the same months the year before.
He also emphasized that the reported total number of users accessing the CREA website didn’t necessarily mean unique users, even if they were being reported by a unique IP address. In fact, Little stated that he believed the number of visitors CREA reported as visiting the website could be grossly overstated since it’s possible a user would access the website from a personal computer at home, a computer a work and a mobile device such as a phone or tablet, each which would have their own unique IP address.
Little also noted that TREB, as CREA’s largest member, represents between 35 and 40 per cent of CREA’s membership, and therefore, have the greatest number of votes when electing CREA’s Board of Directors.
“I don’t want to get into the mathematics, but safe to say TREB has the largest number of votes?” asked Little, to which Simonsen agreed.
Little then confirmed that, in comparison, the Ontario Real Estate Association has only one vote, also remarking that of CREA’s 17 current sitting directors (including CEO Simonsen), three are former presidents of TREB and three are former presidents of OREA.
Justice Denis Gascon asked Simonsen about earlier testimony that identified CREA’s concern about a loss of credibility in the eyes of consumers if confidential information is made available. Simonsen responded that in Canada, MLS is a trademark and that he knew U.S counterparts were envious because they do not own the trademark there. Simonsen continued that MLS was a great selling tool and that anything that would imperil public confidence in it is of concern to CREA.
“We want to ensure that we don’t impact (public confidence in MLS) in a negative way,” said Simonsen. “We want to continue with a respected trademark.”
“And the sold information is a concern to you?” asked Gascon.
“We have concerns with that information in a public database,” said Simonsen.
The panel asked Simonsen why he earlier testified that customers weren’t asking for sold information to be made available on realtor.ca, but that apparently people in the U.S. wanted it on realtor.com.
“I can’t express an opinion on realtor.com – our focus is realtor.ca,” said Simonsen. “Sold data isn’t something we’ve heard back from customers that they’d like to see.”
The day ended with TREB witness Fredrick Flyer, executive vice president of economics consulting firm Compass Lexecon Inc. Flyer prepared a presentation that disputed parts of Competition Bureau witness Gregory Vistnes’ expert report. Among Flyer’s criticisms were that Vistnes, in his opinion, ignored empirical evidence on competitive benefits, dismissed potential privacy concerns, and provided no analysis on potential harm in his analysis.
Final submissions in the case are set to take place in Ottawa on November 2.
Tony Palermo is a contributing writer for REM.
