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RESTRICTIVE TRADE PRACTICES - Interpretation - Prevent or lessen competition substantially - Competition Tribunal

Friday, December 15, 2017 @ 10:36 AM  

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Appeal by the Toronto Real Estate Board (TREB) from two decisions of the Competition Tribunal (Tribunal) which held that certain information sharing practices of TREB prevented competition substantially in the supply of residential real estate brokerage services in the Greater Toronto Area (GTA). TREB maintained a database of information on current and previously available property listings in the GTA (MLS database). TREB made some of the information available in the MLS database to its members via an electronic data feed, which could be used by the members on their websites. However, some data available on the database was not distributed through the data feed and could only be viewed and distributed through more traditional channels. TREB submitted that the restrictions did not have the effect of substantially preventing or lessening competition. It also asserted that the restrictions were due to privacy concerns and that its brokers’ clients had not consented to such disclosure of their information. TREB also claimed a copyright interest in the database it had compiled and submitted that under s. 79(5) of the Competition Act the assertion of an intellectual property right could not be an anti-competitive act. The Commissioner of Competition determined that the restrictions disadvantaged brokers who preferred to establish virtual office websites (VOWs), which resulted in a substantial prevention or lessening of competition. The Tribunal found that TREB had not led sufficient evidence to demonstrate copyright in the database. It further found that even if TREB had copyright in the database, it would not enjoy the protection offered by s. 79(5) of the Competition Act because TREB’s conduct amounted to more than the “mere exercise” of its intellectual property rights. TREB appealed the decision of the Tribunal, arguing that it erred in finding that TREB substantially reduced competition with the meaning of s. 79(1) of the Competition Act, in failing to find that TREB’s privacy concerns or statutory obligations constituted a business justification and that TREB did not have copyright in the database.

HELD: Appeal dismissed. The Tribunal correctly applied the correct framework. The Tribunal correctly defined competitor to mean “a person who competes in the relevant market, or who is a potential entrant into that market” and not a “competitor” of TREB. Its conclusion that the evidence of subjective anti-competitive intent and reasonably foreseeable exclusionary effects outweighed the very limited evidence that was adduced in support of the alleged legitimate business justifications TREB claimed underpinned the development and implementation of the VOW restrictions, was reasonable. In making a determination under s. 79(1) of the Competition Act, the Commissioner did not have a legal obligation to quantify all effects which could be quantified. Nor was the Commissioner required to adduce quantifiable evidence. In relying on qualitative evidence for its findings of anti-competitive effects and its ultimatel conclusion on substantiality, the Tribunal made no reviewable error. To the extent that the Tribunal required regulatory compliance to be the motivation behind the policy, it did so in error. However, in this case, there was no evidence to support the assertion that the policy was genuinely motivated by a concern about compliance with privacy legislation. As the policy was anti-competitive, s. 79(5) of the Competition Act precluded reliance on copyright as a defence.

Canada (Commissioner of Competition) v. Toronto Real Estate Board, [2017] F.C.J. No. 1155, Federal Court of Appeal, M. Nadon, D.G. Near and D.J. Rennie JJ.A., December 1, 2017. Digest No. TLD-December112017010