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Federal regulators in Canada are turning up the pressure on the Canadian Real Estate Association, trying to compel the Realtor group to relax restrictions on the multiple listing service.
Hoping to stave off government intervention, the Canadian Real Estate Association has proposed changes to the national MLS, which it owns. But the proposals were not enough to satisfy regulators.
After months of negotiations, last week the agency regulating commerce, the Competition Bureau, formally filed an application with the federal Competition Tribunal, which has the power to force changes.
“CREA's leadership was unwilling to agree to changes that would have opened up competition, and offered options for consumers and real estate agents," Melanie Aitken, Commissioner of Competition, told the Financial Post.
The Competition Bureau has been investigating CREA for three years. At issue are CREA regulations that permit only Realtors to post listings to the MLS. The rules also state that a Realtor must be used throughout the selling process, guaranteeing full fees for the agents.
In its filing, the Bureau said CREA’s control of the MLS “limits consumer choice” and prevents innovation in the industry.
"In United States, where they have dismantled rules quite similar to these, competition is flourishing,” Competition commissioner Aitken said.
CREA’s proposed changes addressed at least one of the regulators’ key issues--allowing consumers using the MLS to sell their homes without a Realtor.
"We've taken steps to change our rules which should satisfy their concerns," said Dale Ripplinger, president of CREA told the Financial Post. "I don't want to get into specifics because it may be before a tribunal but we addressed the concerns the commissioner had expressed to us."
But the Competition Bureau was apparently unimpressed.
CREA’s counter proposal would put most of the power to make changes in the hands of local boards, which some believe is nothing more than a shrewd strategy to counter the government’s moves. Federal agencies will have a far more difficult time policing the activities of a hundred local groups, the theory goes.
"The tribunal's going to hear testimony from people that tried to do it better and cheaper and were blocked out, got bullied out or got threatened out," Walter Melanson, managing director of PropertyGuys.com, a fee-for-service company, told the Ottawa Citizen. "Our argument is not whether an agent can sell a house or can't sell house. It's whether you need them."
The conflict is the subject of hot debate in Canada.
“To be sure, MLS has the appearance of a monopoly. But appearances can be deceiving,” the Vancouver Sun editorialized. “The fact is that new communications technologies and innovative business models are changing the business, without government intervention.”
CREA’s membership is expected to vote on the proposed changes in March.
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