November 8th - 2007

Anti-competitive behaviour – be aware of it; avoid it

How well do you know Canada’s Competition Act?

How well do you know Canada’s Competition Act? The Act, designed to promote fair competition in the marketplace, applies to virtually all sectors of business – including real estate boards and associations, real estate firms, real estate brokers/agents, independent contractors and real estate salespeople.
 
REALTORS® need to have an understanding of these competition laws and their impact on the real estate industry in order to avoid anti-competitive conduct which could result in criminal prosecution, Competition Tribunal proceedings, and civil court actions for damages. The actual time and expense involved in defending yourself in these proceedings are obvious, but the damage to the reputation of an individual implicated in anti-competitive behaviour may also impose very real costs.
 
Comments made between competitors in the course of their day-to-day dealings can easily implicate REALTORS® and their board/association in claims of anti-competitive conduct. Brokers and salespeople should recognize and avoid statements that suggest anti-competitive activity amongst firms. For example, words and phrases such as these can give the impression of anti-competitive activity:
 
“The best way to deal with John Doe is to boycott him.”
 
“Let him stay in his own market. This is our territory.”
 
“We should co-operate more with each other and all charge the same commission.”
 
“What are your firm's commission rates?"
 
“We should agree to co-operate with XYZ Realty only if they agree to a higher commission split.”
 
“ABC Realty shouldn't be allowed to join our Board. Their ‘flat fee’ marketing approach just wouldn't fit in with the way we do business around here.”
 
Any of these comments or similar comments may initiate an investigation by the Competition Bureau into suggestions or allegations of anti-competitive behaviour.
 
Tips for Competition Act compliance

  • Avoid any discussion with competitors about the brokerage firm's “intentions” to modify fees or commission splits.
  • If a brokerage firm is modifying its rates (i.e. commissions or fees for services), document the business reasons for the decision. This correspondence should be clear in stating the decision was made unilaterally, based upon particular or specific economic circumstances. Any distribution of the memo should be limited to members of that brokerage firm.
  • Salespeople working for a particular brokerage firm should be able to explain the services provided for the fees charged and never infer or suggest that fees were "fixed" in co-operation with other firms or that they are standard for all brokerage offices.
  • Brokers/agents must determine their co-operative compensation policies, also known as commission splits in a unilateral and independent manner.
  • Salespeople should be instructed never to suggest to others in the real estate industry, including competitors, potential clients or customers that they should not do business with a particular competitor because other brokers/agents will not co-operate with that firm.
  • Do not discriminate against discount brokers because of their low pricing policy.

Take the test
The fact is, complying with the Competition Act is the law and ignorance of the law is no excuse. REALTORS® can learn all about competition law and take a Compliance Test by logging on to the Realtor Link® web site at www.realtorlink.ca and accessing the Real Estate Compliance Centre.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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