The second day of The Commissioner of Competition v. The Toronto Real Estate Board Competition Tribunal hearing began with TREB presenting its case for Chief Justice Paul Crampton’s recusal. After a 90-minute deliberation, the panel ruled that TREB’s lawyers failed to meet the burden of proof that the Chief Justice could compromise fair hearings.
Fourteen years ago, Crampton had “two or three” vague conversations with real estate firm RealtySellers about competition laws before the company launched an anti-competition lawsuit against TREB in 2002. That was the same year Crampton departed his former law firm, Davies, Ward, Phillips and Vineberg LLP. In addition to the phone conversations, Crampton was copied in an email on April 18, 2001.
The panel determined Crampton had no further involvement in the case.
The Competition Bureau’s lead prosecutor, John Rook, opened arguments after lunchtime, asserting that TREB stifles competition in the GTA’s real estate market by monopolizing the MLS terms of use. The board’s hostile disposition towards virtual office websites (VOWs), Rook argued, stymie innovative Internet services, which hurts both consumers and TREB’s 42,000 members.
He said TREB’s conduct is reviewable under Section 79 of the Competition Act.
Rook specifically censured TREB’s defensive strategy – which posits the trade organization is protecting consumer privacy – as a smokescreen for control of the GTA real estate market, stating that about 75 per cent of the GTA’s transactions involve just a few brokerages.
“New innovative ways of doing business are bad to TREB,” said Rook, adding the organization oversaw $2.3-billion in revenues last year.
“The board has a rule prohibiting historical data online,” even though members are permitted to share information in person, by phone, fax or email, said Rook, “which is at the heart of discrimination.”
He argued that by omitting vital MLS information such as historical data, VOWs are at a competitive disadvantage and will not be able to break into the red-hot, yet cutthroat GTA market. “TREB has market power and (its) rules discriminate against VOW operators,” said Rook.
He also derided TREB for a 2012 email exchange between board members, in which one member, speaking about VOWs, wrote, “It would be akin to having knee replacement.”
Rook said, “They did this with malice and forethought.”
Lead TREB lawyer Donald Affleck said that clients entrust the organization with protecting confidential information, both personal and financial.
“Should personal information be used by just anyone with an Internet connection and an email address?” he asked.
Affleck said TREB already shares information liberally through the Internet Data Exchange (IDX), which 39,000 of its members use. “Toronto Real Estate Board members embrace it. The Toronto Real Estate Board does embrace innovation,” he said.
CREA is also involved in this case as an intervener. Lawyer Sandra Forbes, representing CREA, said, “Innovation of the Internet is not on trial here. Access to sensitive data is at stake. Virtual office websites don’t function the same way as Realtors; they don’t conduct showings and they don’t close deals.”
Moreover, Forbes said that accessing disputed information on VOWs compromises MLS credibility because no safeguards exist to prevent potentially hostile parties from accessing sensitive information.
“You click on the terms of use, accept the terms of use, provide an email address, etc. It can be accessed by anyone – and I do mean anyone.”
The first witness called to the stand by The Competition Bureau was William McMullin, founder and CEO of Viewpoint Realty Inc. The largest independent brokerage in Nova Scotia, the company closed 421 transactions in 2014. McMullin also testified at the 2012 hearing.
“We continuously look for ways to use the Internet, data and technology to facilitate trade by assisting buyers and sellers,” McMullin told the hearing panel. “I’ve never met a customer that didn’t want to know as much as they can.”
McMullin said one in three Nova Scotians is registered to Viewpoint’s website, even if they’re not all engaged in real estate trade.
Rook asked McMullin about “use and display” of information on his website. McMullin said that not all MLS information is displayed on his site. He conceded that Viewpoint has had a few privacy complaints, but said the brokerage’s website has received millions of page views.
McMullin will continue his testimony on Wednesday. Rook advised the hearing that a representative from U.S. technology-focused brokerage Redfin Realty will also take the stand this week.
Watch REM for daily updates.
Neil Sharma is a contributing writer for REM.
