The TREB ruling and the Bureau’s role in upholding competition

By Kim Covert October 11, 201811 October 2018

The TREB ruling and the Bureau’s role in upholding competition

 

The Competition Bureau’s Jeanne Pratt doesn’t have to think too hard when asked how long it took to reach a final decision in the Toronto Real Estate Board abuse of dominance case – it’s the same age as her only child.

“I look at him and how much he’s grown,” Pratt, the Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, told a plenary session at the Competition Law conference in Ottawa in September.

A Federal Court of Appeal decision in December upheld a 2016 Competition Tribunal ruling that requires TREB to remove restrictions on its members’ access to real-estate data, including historical listings and sale prices – for display online through virtual office websites.

In August, the Supreme Court of Canada dismissed TREB’s application for leave to appeal the appellate court’s ruling.

“It was ten years from investigation to result, where consumers in Toronto did not have access to (housing price information) and in that time prices went up exponentially,” Pratt said.

The session’s panellists were addressing the TREB ruling as well as a related ruling from the U.S. Supreme Court regarding American Express. In the latter, the high court ruled that the credit card company did not violate anti-trust laws by putting provisions in its contracts with merchants restricting them from encouraging consumers to use other, perhaps less expensive, forms of payment, a practice called “steering.”

That case had been going on since 2010, when the U.S. Justice Department and 17 states sued credit card companies for their steering practices. Visa and Mastercard settled, but American Express fought all the way to the Supreme Court.

Moderator Brian Facey, a lawyer with Blake, Cassels and Graydon in Toronto who was involved with the TREB application to the SCC, asked whether there might be a faster and better way to get these cases done.

American Express’s VP and Chief Antitrust Counsel, Suzanne Wachsstock, suggests there was value in the process.

“On the one hand it is extremely difficult for a company to go about their business under the overhang of a big anti-trust case – having those long, drawn-out cases is difficult,” said Wachsstock. “But having lived through it, I’m glad we went through the process and that it took the time that it did.”

She does note, however, that given the time, the cost, and the drain on all kinds of resources, it’s tough for companies to go all the way.

“I don’t think anyone thinks these cases should be taking eight-to-10 years – entire industries live and die in that time,” said Fiona Shaeffer, a lawyer with Milbank Tweed Hadley & McCloy LLP in New York.

She also posed the question: How would the market have looked but for the alleged restraint – that’s where innovation comes into effect.

In the TREB case, the Tribunal held that there would have been more innovation in the market without TREB’s restriction on data-sharing, that consumers had been deprived of opportunity because the Board’s members were deprived of information to share with them.

Pratt, who like all panellists noted that she was giving her own opinions in the matter, and not those of her employer, listed her top three takeaways from the case:

1. Dynamic competition rules – The first rule of the Competition Bureau, says Pratt, is to do no harm to dynamic competition, which is competition engendered by innovations in products and processes. Dynamic competition drives the growth of disruptive business models.

2. There’s a fine line between competition and abuse of dominance - The Competition Act’s section 79.1(b) states that if the Tribunal finds someone is engaging in anti-competitive acts, it may prohibit that person from engaging in that practice. That framework, says Pratt, is all about conduct and not effects. How the dominant gatekeeper acts against a competitor is an element of the reason in the TREB decision.

3. No need to quantify abuse of dominance effects – In cases where it’s not possible to quantify the impact of the anti-trust action – no one can know what the effect would have been on business models or house prices if consumers had had access to a wider range of information before buying or selling, for example – then qualitative effects are sufficient.

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