Canada's Competition Tribunal said it expects its ruling against the Toronto Real Estate Board (TREB) will unleash innovation in the country's largest housing market, but predicted that sweeping changes would do little to drive down commissions.
In a 175-page ruling released publicly on Tuesday, the tribunal's three-member panel rejected most of the real estate industry's arguments against allowing realtors to share electronic information on home sales and real estate commissions with the general public, saying the industry's concerns over copyright and privacy were intended "primarily to limit or at least restrict a potentially disruptive form of competition in the [Greater Toronto Area]."
The public decision follows a confidential ruling the tribunal issued late last month that found the real estate board was stifling competition by restricting the ability of online brokerages to electronically access and publicly display data from the Multiple Listings Service. The MLS is a member-only data feed that contains non-public details about resale listings, such as the number of days a home has been on the market and the home's current and previous selling prices.
Competition Commissioner John Pecman had argued for the tribunal to force TREB to scrap restrictions that prevent realtors from widely sharing data such as details of a home's selling price, listings that have been withdrawn or suspended, along with information about the commissions of buyer's agents. In its ruling, the tribunal sided strongly with Mr. Pecman. It likened TREB's concerns over homeowners' privacy to "a pretext to attempt to legitimize its practice of anti-competitive acts," pointing to an instance in 2004 when the board rejected a request by a homeowner to remove his details from the MLS.
It said the restrictions on data had made it more expensive for online brokerages to operate in the Greater Toronto Area, citing several examples of companies such as Viewpoint, TheRedPin and Realosophy that had struggled to expand in Toronto's housing market because of the rules.
The tribunal also said it found scant evidence to support TREB's concerns that relaxing rules around home sales data would encourage larger brokerages and franchises to leave the board and "establish a rival MLS."
However, despite finding that changes would encourage innovation, the tribunal said it would be unlikely to do much to move the needle on real estate commissions, or encourage buyers to opt out of hiring a real estate agent to buy or sell a home. It noted that the percentage of home sales transactions involving a realtor actually rose to 88 per cent from 84 per cent in the United States after the U.S. Department of Justice forced a similar rule change south of the border in 2008.
The tribunal has yet to make a final decision on what changes it may force TREB to make to comply, although it said it plans to find the "least intrusive" way to promote competition in the market.
It also offered no details about whether its ruling will apply to other real estate boards in Canada. The tribunal ordered TREB to pay the Competition Bureau $328,000 in legal costs .