By Paul Feuer
This is the second article in the Competition Law and You series.
REALTORS® are tough competitors who fight for business every day. At the same time, there are rules of acceptable conduct: we have to treat competitors with civility (as required by the REALTOR® Code) and avoid conduct that might be considered anti-competitive under the Competition Act.
In general, you can independently decide who you will deal with and in most cases (not all) this won’t raise issues under the Competition Act, unless your business is very large and has market power in a particular market. But remember that agency law requires you to act in your client's best interests, and a buyer agent deciding not to show certain listings to clients without their knowledge could be a problem. If the issue is the level of cooperating commission being offered, the better route is a buyer broker arrangement containing a guarantee that the buyer will make you whole if the cooperating commission is below a certain amount.
Independent decisions are one thing, but there is automatically a serious issue under competition law as soon as two or more competitors start talking about how they will treat another competitor. For example, if a group of brokers discuss potentially boycotting a competitor's listings, this could raise problems under both agency law and the Competition Act.
Under the Competition Act, an agreement to take part in a group boycott constitutes a criminal conspiracy punishable by up to 14 years in jail and/or up to $25 million in fines if convicted. Even if not convicted, you could become the subject of an expensive, lengthy and reputation-damaging investigation by the Competition Bureau.
Members also should be careful when making comments about their competitors. Article 19 of the REALTOR® Code is very clear that a “REALTOR® shall never publicly discredit any other Registrant. If the REALTOR®’s opinion is sought, it should be rendered with strict professional integrity and courtesy." You should avoid making derogatory comments about the capacity, integrity or competence of any other registrant in any form of communication including on social media. If someone does ask for your opinion about a specific transaction or someone else’s business practices, comments must be given with strict professional integrity, objectivity and courtesy. For example, it would be inappropriate to say “If you list with that brokerage, no one will show your home”. Beyond the REALTOR® Code, this raises competition concerns because it implies that there might be a conspiracy to boycott that registrant. And if a brokerage with a particular business model is the target of such a comment, then the Competition Bureau is even more likely to investigate.
It is always better to promote your own services instead of disparaging your competitors or their business models. “That brokerage offers X services and Y compensation to buyer agents. We take a different approach. Our brokerage provides important services (such as A,B,C) that we believe will help you sell your home. Also, in our experience offering a higher cooperating compensation rate of D can attract greater attention and result in more showings and potentially more offers”.
Also, disparaging comments aimed at a particular competitor that causes them damages could result in them taking legal action against you, e.g., for defamation.
Ultimately REALTORS® are professionals. We should all promote our professionalism through honesty, integrity, fairness, accountability and professionally competent service consistent with the ethical standards set out in the REALTOR® Code and with the law.
For more information, check out the short video “Doing Business with Competitors” along with other resources at https://www.realtorlink.ca/content/realtorlink/crea/en_CA/resources---compliance/legal-compliance---national-standards/compliance-resources/competition1.html
Paul Feuer is the Senior Competition Counsel of the Canadian Real Estate Association.