The Federal Court of Appeal reserved its decision Wednesday after listening to arguments from both sides in the high-profile battle between the Competition Bureau and Canada's largest real estate board.
The Bureau has spent years trying to prove that the Toronto Real Estate Board, which represents more than 35,000 realtors and brokers, is engaged in anti-competitive practices. It had another shot to makes its point Wednesday, when it presented its case to the appeal court, after losing a lengthy hearing last year at the Competition Tribunal.
The case could impact the commissions that consumers pay to realtors, John Rook, a lawyer for the Commissioner of Competition, suggested to the appeal court.
The dispute hinges around data about the prices that homes have sold for in the recent past. The Competition Bureau wants the Toronto Real Estate Board to allow this data to become more freely available online.
Mr. Rook argued that information about the prices that homes in a given neighbourhood have fetched is critical to buyers and sellers. He said that the Toronto Real Estate Board, which owns and operates the Toronto area's Multiple Listing Service, has the most comprehensive, accurate, and up-to-date information about listings and prices.
He went on to imply that the real estate board restricted the use of its data because realtors were fearful that more online competition would lead to a reduction in the commissions that they charge. Technological advances could lower costs, attract more business, and ultimately reduce prices for consumers, he implied.
He said that commissions tend to be sticky, at around 2.5 per cent of the sale price for the selling agent and 2.5 per cent for the buying agent. Because commissions haven't changed much, realtors have been able to earn substantially more over the past five years thanks to rising home prices, he added.
The Competition Bureau estimates that realtors in the Greater Toronto Area earned $1.77-billion in commissions in 2007 and $2.2-billion in 2011. A one percentage point drop in commissions would save consumers in the city several hundred million dollars, Mr. Rook told the appeal court.
Much of his case relies on the meaning of section 79 of the Competition Act, which talks about a person or persons who have or are engaged in anti-competitive acts. Mr. Rook argued that the definition of a person in this instance includes trade associations, such as the Toronto Real Estate Board.
"TREB acts for the benefit of its members in the same way a parent company acts for the benefit of its subsidiary," he told the court. "TREB had market power by virtue of its control of the MLS."
But lawyers for the Toronto Real Estate Board argued that parliament could have more broadly defined person if that was what it intended.
TREB is a not-for-profit organization, and is not concerned with which realtors are winning or losing in the market, argued lawyer David Vaillancourt.
"A trade association cannot control this market," he said. "The economic benefit is derived by the members of TREB," not the board itself, he said.
In order to control a market, one has to be a competitor in that market, he argued.
TREB has previously said that privacy concerns are one of the main reasons it doesn't make data about the price that homes have sold for more widely available.
While the case focuses on the Toronto board, it is likely to have national implications.