The federal Competition Bureau says it will challenge the restrictive rules that govern the multiple listing service (MLS) system used by most Canadian home sellers to list their properties.
The MLS system, run by the Canadian Real Estate Association, includes information that is only available to CREA members, and its structure impairs consumer choice, the bureau said Monday.
It wants consumers to be able to pay a lower fee to list their homes on MLS without being forced to buy a whole range of other services. This would essentially allow homeowners to use MLS for a small fee, then negotiate the sale of their homes without the help of an agent.
If these changes come to fruition, the cost of buying and selling residential real estate could drop sharply.
The bureau has filed an application to the Competition Tribunal, a quasi-judicial body that will decide if its complaint is justified.
"Selling a home is one of the largest financial transactions that most Canadians make in their lifetime," Melanie Aitken, the commissioner of the Competition Bureau said in a statement. "Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options."
The bureau said it had tried to negotiate a compromise with CREA, but the association was "unwilling to agree to changes that would have opened up competition."
CREA's rules limit consumers' ability to choose the real estate services they want, the bureau said, and force them to pay for services they don't need. The rules also stop agents from offering clients innovative services and pricing options, it said.
The real estate industry has argued that consumers need real estate agents to help them through a confusing process, and that the skills of agents are necessary to maintain the integrity of computerized listings.
CREA president Dale Ripplinger said the decision was "surprising and disappointing."
"We do not agree with the Bureau's position that certain CREA rules are anti-competitive, either as a matter of fact or as a matter of law. CREA's rules allow for innovative business models and provide a broad range of choice for consumers," Mr. Ripplinger said in a statement.
The MLS was developed in the 1960s, long before computer networks made information sharing simple and efficient. It allows agents from different real estate agencies to co-operate on deals, and ensures that each property is well-exposed to potential buyers.
Some of the information on MLS -- such as what a property sold for in the past, and recent sale prices in the neighbourhood -- is only available to agents.
The Competition Bureau wants to open the way to innovative products and discount providers - companies that would help seal a real estate deal for a flat fee, for example, rather than the typical commission structure.
In the United States, a 2007 ruling by the Department of Justice opened up the MLS data in that country, spawning a wide range of innovative web-based real estate services and driving down real estate fees.
In an interview, Ms. Aitken said the competition bureau's case is about opening competition to benefit consumers.
"Let consumers have the choice, let agents have the opportunity to satisfy and serve those choices," she said. "Unfortunately CREA's leadership has taken the view that they don't accept what we think is absolutely necessary to protect Canadians, to inspire the kind of competition we all deserve."
She said that while bureau is no longer negotiating with CREA, a settlement could be reached before the case is heard by the Tribunal. "If CREA's leadership were to change their view and was prepared to accept what we have detailed in our notice of application as necessary, then of course we would talk to them."
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