Privacy concerns do not justify restricting real estate data, says Federal Court of Appeal

Privacy concerns do not justify restricting real estate data, says Federal Court of Appeal
Donald Houston says a recent Federal Court of Appeal ruling made it clear there was not a privacy impediment to making home sales data available.

An appeal by the Toronto Real Estate Board has been dismissed by the Federal Court of Appeal, the latest in an ongoing legal battle that’s attracted the notice of the competition bar.

The latest ruling involving TREB and the Competition Bureau was released Friday, with the federal court dismissing an appeal by TREB of a Competition Tribunal decision from 2016. The decision relates to an abuse of dominance allegation against TREB, for not allowing realtors to share home sales data online. TREB cited privacy concerns as the basis for the restriction.

“It’s an abuse of dominance allegation. . .being that TREB has a dominant position in [Multiple Listing Service] based real estate, and that it abused that dominant position by restrictions that it put on access to MLS data,” says Donald Houston, partner at McCarthy Tétrault LLP in Toronto.

“In the TREB case, the focus is on the restrictions that TREB put on access to certain types of MLS data,” says Houston. “The Commissioner said that was anti-competitive because it prevented innovative virtual office websites from effectively competing.”

Houston says there are three elements to showing abuse, which include illustrating that TREB was dominant, that it engaged in the practice of anti-competitive acts, and that its actions had a substantial prevention or lessening of competition. The heart of TREB’s defence was the restrictions it put on were for privacy reasons, and under the federal Personal Information Protection and Electronic Documents Act, the information could not be freely disseminated.

However, the tribunal did not agree.   

“[T]he Tribunal held that the ultimate consequence of the anti-competitive effects found to exist was the maintenance of TREB and its members’ collective market power in respect of residential brokerage services in the GTA. . .and that failing an order on its part, that market power would likely continue. . .,” said the ruling.

Houston says the Federal Court of Appeal backed the tribunal, ruling that the tribunal’s finding was factual and therefore would not be overturned, since it was based on good evidence.

The court also held that in the case there was not a privacy impediment to making the information available, says Houston.

“That’s the first interesting thing that flows from the decision, is that if the Court of Appeal had said there was a privacy prohibition on making this information available, then it may have overturned the tribunal decision. . .,” says Houston.

“In future cases, if there is a valid privacy reason for not disseminating information, that may trump. . .an otherwise anti-competitive restriction.”

Houston says a valid regulatory constraint could be used as a basis for a company or organization to undertake an action even if there is an anti-competitive result.

The ruling also stated “TREB’s and [intervener the Canadian Real Estate Association]’s arguments regarding the Tribunal’s reliance on qualitative evidence are without merit.”

“The court said — and it upheld the tribunal on this — that in an abuse case, the evidence showing anti-competitive effects can be qualitative evidence, in addition to quantitative evidence,” says Houston.

“[W]hile it didn’t rule out requiring quantitative evidence in the right case, it held that — at least in some cases — in an abuse situation, qualitative evidence can be sufficient.”

A release by Competition Bureau Canada welcomed the ruling.

“The decision upholds an order issued by the Competition Tribunal in 2016 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,” said a statement. “This will allow home buyers and sellers to take advantage of a greater range of service options when making one of the most significant financial transactions of their lives. Opening up access to real estate data will allow member agents to offer consumers the convenience of data-driven insights into home sales prices and trends via the web, and to improve the efficiency and quality of their services.”

John Pecman, the federal Commissioner of Competition, said the ruling was “an important win for competition and for consumers.”

“[I]t paves the way for much needed innovation in the real estate industry. Anti-competitive activity that hinders innovation in the Canadian economy will continue to be a top priority for the Bureau,” said Pecman.

A TREB statement on behalf of TREB’s chief executive officer, John DiMichele, said TREB did not agree with the ruling, and would be “seeking leave to appeal the decision together as well as an order staying the decision pending the outcome of that appeal, if granted.”

“TREB believes strongly that personal financial information of home buyers and sellers must continue to be safely used and disclosed,” said DiMichele, in the statement.

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