05/28/2011 10:36 EDT | Updated 07/28/2011 05:12 EDT

Toronto Real Estate Board Sued Over Web Listings By Competition Watchdog

TORONTO (CP) -- The Competition Bureau has filed a lawsuit against Canada's largest real-estate board, a move the federal agency hopes will warn other boards against using tactics that limit competition and consumer choice.

The watchdog said Friday it filed an application to the Competition Tribunal — the body that rules on competition cases — against the Toronto Real Estate Board for preventing the creation of password-protected sites for clients.

The bureau said it has been investigating a complaint since 2007 against the local Toronto board for restricting how agents provide information to their customers through the local Multiple Listing Service — which is used in about 90 per cent of Canadian real estate deals.

"They're using that monopoly control to deny innovation, deny choice for consumers by imposing these restrictive rules so that's why it is — in our view — anti-competitive and contrary to the Competition Act," said Melanie Aitken, the competition commissioner.

But Toronto board president Bill Johnston said he is surprised the bureau is launching a public legal battle because the board was already close to implementing a policy that would allow the use of those sites, known in the industry as "virtual office websites."

The move comes after the bureau reached a settlement agreement last year with the Canadian Real Estate Association — which represents real-estate boards and realtor firms. The bureau won concessions that make it illegal for local boards to ban members from posting listings for private sellers.

Local boards still create and enforce their own rules on an array of issues that impact how their realtor members conduct business. Aitken said she hopes other boards will think twice about imposing similar restrictions after the bureau served notice to the 31,000-member Toronto board.

Aitken acknowledged the bureau has worked with TREB to reach an agreement that addressed its concerns but said she won't settle for anything that's not legally-binding, such as a written agreement or an order from the tribunal.

Johnston countered that the bureau is wasting taxpayer money because the board will have a policy in place by the end of August that shows it is "doing the right thing."

"It's going to be done and there will never be a hearing because at the hearing the bureau would look foolish for bringing something to the tribunal that's already been taken care of," Johnston said.

Aitken said consumers are being denied choice because while local agents are allowed to provide detailed MLS information to customers in person or through fax or email, they currently banned from doling out such information through websites.

"We're talking about passing along the very same information they're passing along today just in more traditional forms, putting that information in a secure environment on the website, so their customers can look at it at their leisure and make better informed decisions."

Johnston said the board is taking its time to make sure the proper rules are in place to protect consumers — "who have a concern about making data about their purchases and properties available without some protection."

Aitken said there are no privacy issues involved as the website would be secure like a banking site. The model already exists in the U.S., where agents are using the sites to post more information such as schools and crime in the area.

"What's happening in the United States is — what you would expect— more competition, more innovation, prices going down for consumers," she said.

Delegates from Canada's 101 local real estate boards ratified an agreement in October worked out by the bureau and the real estate industry. The deal allows consumers to choose what services they want from their agent when selling their homes and to pay for only those services.

Prior to that, CREA's rules stated that real estate agents were required to represent clients through each step of the sales process. Under a CREA convention, buying and selling agents usually split the usual four to five per cent payout from any home sale.

The deal was reached after months of negotiations between the competition watchdog and the Canadian Real Estate Association that represents some 100,000 realtors.