Steve Ladurantaye

The Toronto Real Estate Board’s attempts to appease the country’s Competition Bureau have fallen flat, with the bureau filing updated complaints that lambaste the board’s plan to allow agents to set up private websites for their clients.

The board’s proposed policy falls short in two key areas, the Competition Bureau said, and does nothing to address its anti-competitive concerns. Under the new plan, real estate agents would not be allowed to post historical sales data on the websites, or information about commission fees.

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Historical sales data are a key way for buyers to gauge a home’s value, because they can see how often the property has changed hands and for how much. If consumers could obtain all of the data online and save their agent some work, the Competition Bureau argues, they could expect to pay less in commission fees.

“If the proposed rules are enacted, they will continue to prevent member brokers from operating a [website],” the revised statement of claim states. “TREB will continue to thwart the development of new, innovative, and efficient models of providing real estate brokerage services using the Internet. The proposed rules will discriminate against brokers seeking to innovate, and will constitute a further anti-competitive act by TREB.”

The Toronto board already allows real estate agents to provide a great deal of information to buyers – such as the number of days a house has been on the market and previous selling prices – by hand, telephone or e-mail, but they are not allowed to create websites where customers can look up the information on their own.

The board was quick to react after the Competition Bureau filed its initial complaint, passing a policy that would allow agents to set up the sites as long as certain guidelines were followed – the sites must be password protected, available only to clients, TREB would be able to monitor who is using the site and how, sellers could opt out of having their home appear on the site and the seller’s name and contact information couldn’t appear in the listings.

But without sales data or commission information, the Competition Bureau said the board hasn’t gone far enough. That’s because the bureau wants brokers to be able to use all of the sales data generated by the board to create products that ultimately lower fees for consumers.

Any restriction on the flow of information is unacceptable, Competition Bureau Commissioner Melanie Aitken said. Real estate fees are artificially high in Toronto, she said, because brokers aren’t allowing their clients to do some of the legwork themselves.

Some brokerages in the United States offer their clients as much as 50 per cent off their commission fees if they use a website to do their own research, she said.

The real estate board’s executives have been working on a policy for its 30,000 members since last August, and met with the bureau several times prior to filing the allegations. Former TREB president Bill Johnston has spoken out strongly against Ms. Aitken’s office, accusing her of using her pulpit to advance her career at the expense of the country’s real estate industry.

Friday, the board said it stood by its new policy. If the two sides can’t find a way to break the impasse, the case will go to the Competition Tribunal, which is allowed to issue fines and could issue binding resolutions to force the board to make changes if it felt the complaints were warranted.

TREB president Richard Silver said the board’s main concern is that the bureau wants it to also publish sale prices for homes that have been sold, but haven’t officially closed yet. That could compromise the seller’s ability to get the same price if the deal falls through, he said.

“The Commissioner is pressuring TREB to make changes to its own property listing system that TREB believes would violate consumer privacy laws, reduce the quality of the system, and diminish protection for consumers who list their homes in the Greater Toronto real estate market,” he said.

“TREB appreciates that the Commissioner has a job to do, but TREB is the wrong target. The Commissioner obviously has recognized that her initial application back in May was faulty. Instead of working with TREB to find a practical solution for consumers, the Commissioner has today decided to pursue an additional legal process that will further delay improvements and further disadvantage consumers.”

The fight for real estate commissions is about to heat up, as two of the industry’s biggest agitators join forces in an attempt to steal market share from the country’s 100,000 real estate agents.

Propertyguys.com Inc., a company that helps people sell their own homes, will merge with flat-fee brokerage Realtysellers Real Estate Inc. The deal will make it easier for those who want to handle their own transactions get their properties on the popular Realtor.ca website, which provides the online listings for an estimated 90 per cent of the country’s home sales.

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The two companies decided to merge after the Competition Bureau and Canadian Real Estate Association changed the rules to allow flat-fee listings to appear on the Multiple Listing Service, if they are posted by a licensed brokerage. Previously, anyone who had a listing on the MLS had to employ an agent to handle every component of a transaction, whether they wanted those services or not, normally for a fee of 4 to 5 per cent of the sale price of a home. At an average price of At an average price of $376,817 that means a commission of up to $18,840.

While Propertyguys was able to establish partnerships with local brokerages to get their listings posted since the Competition Bureau settlement with CREA, they had to hand off a client if they wanted additional services that required a licensed real estate agent.

Unlike agents that charge commission for their work, Propertyguys charges an up-front fee, depending on the type of service a seller wants. They can choose to simply buy lawn signs or sign up for a larger marketing package. Now they’ll also be able to buy services such as appraisals to help determine a selling price, or pay for help negotiating with potential buyers.

“This will allow us to navigate the market much more easily,” said director of partnerships Walter Melanson. “As outsiders and non-registrants in the real estate industry, we needed some help from an insider who understands the regulatory frameworks and can help us do things right.”

The merger will allow Propertyguys to post listings through Realtysellers, which is licensed in Ontario and expects to be licensed in other provinces soon. Propertyguys has about 7,500 for-sale-by-owner listings across the country right now.

Lawrence Dale, CEO of Realtysellers, is a Toronto lawyer who has battled the real-estate industry for the better part of a decade after his flat-fee service was shut down in 2001. His persistence is widely credited for the Competition Bureau’s investigation that led to the easing of listing restrictions, and he vowed not to get back into the business until he could “offer customers a buffet of services rather than force them to eat a whole meal.”

The Competition Bureau says it felt compelled to move to block Air Canada’s partnership with United Continental because the two carriers have the clout to elbow out new competition on important Canada-U.S. routes.

In its notice of application released Tuesday, the bureau spelled out in further detail why it is attempting to stop the venture. It took aim at United Continental Holdings Inc.’s strength at air terminals such as Chicago O’Hare, Denver International, Houston’s George Bush Intercontinental, Cleveland’s Hopkins International, Los Angeles International and Washington Dulles. Air Canada is the leading airline at domestic airports such as Vancouver, Montreal and Toronto’s Pearson International.

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The carriers insist their joint venture would lower airfares. The airlines’ schedules are co-ordinated, and consumers have an opportunity to amass frequent-flier points on a greater number of flights. But the Competition Bureau, which on Monday announced its move to quash the partnership, calls it a merger because the airlines would operate as one on some routes, sharing information on pricing and schedules.

In the documents made public Tuesday, the bureau suggested that the Air Canada-United Continental venture will drive up costs for consumers because it will be difficult, if not impossible, for other airlines to compete on those routes.

“Certain airports on the transborder routes have insufficient capacity to allow for sufficient access to take-off and landing slots, and/or may have other constraints based on the capacity of their existing facilities that increase barriers to effective entry or expansion,” the bureau said.

The bureau said the proposed deal is anti-competitive for other reasons, noting that the carriers “have highly developed flight networks that centralize large volumes of passenger traffic into hubs that impede or foreclose a potential competitor’s access to the volume of feeder traffic necessary to effectively compete on a transborder route.”

The Competition Bureau listed 10 “monopoly” routes: Calgary-Houston, Montreal-Houston, Montreal-Washington, Ottawa-Washington, Ottawa-New York, Toronto-Cleveland, Toronto-Denver, Toronto-Houston, Toronto-San Francisco and Toronto-Washington.

PI Financial Corp. analyst Chris Murray said Canada’s competition watchdog appears to be overstating the importance of market share and overlooking the harsh economics in the airline industry, especially in an era of high jet fuel costs.

He pointed to Air Canada’s move in May to cancel some of its own flights, including on the Montreal-Washington, Ottawa-Washington, Calgary-Chicago and Calgary-San Francisco routes.

“What really is the barrier to entry? Air Canada has already said those four routes are uneconomic,” Mr. Murray said.

He also said WestJet Airlines Ltd., which competes aggressively at Calgary International Airport against Air Canada, could start certain transborder routes if it chose to, but travel demand has to be strong enough to justify new flights.

United Continental emerged from last year’s merger of Chicago-based United Airlines and Houston-based Continental Airlines.

Last November, Air Canada’s transborder service overlapped with 13 of United’s routes and six of Continental’s, according to regulatory filings.

While the airlines see their loyalty programs as friendly toward consumers, the bureau said frequent-flier plans promote “exclusivity in corporate customer contracts, which create significant switching costs.”

On Monday, the carriers suspended their proposed joint venture, pending the outcome of its fight against the bureau.

Canada’s competition laws have been toughened in recent years as the government aims to crack down on predatory business practices, but the most transformative change for the Competition Bureau might have been the appointment of Melanie Aitken as the country’s top watchdog.

As Competition Commissioner, Ms. Aitken has taken aim at a host of high-profile industries – the Canadian real estate sector, credit card companies, gas cartels and cellphone providers.

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Monday’s decision to target Air Canada – the country’s biggest airline – is an example of her strategy of pursuing cases that can set legal precedents and act as deterrents to executives in other industries.

“From a consumer perspective, she’s certainly picking all the right cases,” said Steve Szentesi, a competition lawyer at Vancouver’s Hakemi & Co. “She is perceived in the industry as an aggressive, no nonsense commissioner, and it’s fair to say she’s thought of as more capable than others have been in the role.”

Others suggest Ms. Aitken, 44, takes a rather American approach to the job. Former commissioners have kept a low profile, but Ms. Aitken is comfortable having her fights in public. A former litigator, she still pines for the courtroom and its confrontational setting.

Ms. Aitken came to the bureau after being seconded to the Justice Department from law firm Davies Ward Phillips & Vineberg LLP to work on competition files. Within two years, she was heading the bureau’s merger division, which would be thrust into the spotlight after a federal judge slammed the agency for overstepping its boundaries when investigating the Labatt Brewing Co. Ltd. takeover of Lakeport Brewing in 2008.

An independent review cleared Ms. Aitken’s department in 2009, and she was soon appointed commissioner. At the same time, Parliament handed the Bureau sweeping new powers, which allowed for fines up to $25-million for anti-competitive behaviours such as price fixing and gave commissioners the power to delay mergers by up to a year while reviewing them.

“There may be new rules, but the perception remains that her litigator background is what’s really driving the Bureau,” Mr. Szentesi said. “She’s had to choose the type of cases that can test the new rules and establish new precedents, and she’s been more than willing to do that.”

Her blunt approach has caused some of her targets to question her motives.

Bill Johnston, former president of the Toronto Real Estate Board, accused her of “career building” when she levelled fresh charges at his organization earlier this month, suggesting she was intent on grabbing headlines at the expense of his industry.

Others accuse her timing releases to gain maximum exposure – going after credit card companies at Christmas, or airlines the weekend before a busy long weekend of travel.

“We’re not that sophisticated,” she said on Monday. “I’m just a law enforcement official trying to do my job. We spend a lot of time trying to reach consensual agreements, it can take several months to do that work and determine what the outcome might be.”