Have you ever wondered about the Competition Act as it relates to the real estate business and REALTORS®? This article from the Real Estate Board of Greater Vancouver sums it up nicely.
Keep the Competition Act in Mind
REALTORS® are in constant search for innovative ways to distinguish themselves from their competition. The quest for the proverbial “leg up”, however, must be balanced against the obligations all REALTORS® have under the Competition Act. Violating the Competition Act can result in severe penalties, including significant fines and jail terms.
The Competition Act is federal legislation designed to promote fair competition in the marketplace. The act applies to virtually all sectors of business, including real estate boards, firms, brokers, independent contractors and salespeople.
Failure to recognize and avoid anti-competitive conduct can result in criminal prosecution, Competition Tribunal proceedings and civil court actions for damages.
Members are strongly encouraged to visit the Competition Compliance Centre on REALTOR Link® and review the Canadian Real Estate Association’s (CREA) Real Estate Competition Guide. CREA’s legal department has created a series of four animated videos covering key competition issues for REALTORS®. The first video deals with collusion and conspiracy and is available on CREA’s home page on REALTOR Link® under the Legal – Compliance Centre tab. Coming soon are Don’t Mislead, Setting Your Prices and Doing Business with Competitors.
The relevant provisions of the Competition Act may be simplified to three basic rules:
- Don’t collude. Make independent business decisions without discussion or consultation with competitors.
- Don’t discriminate against or refuse to do business with competitors or other persons because of their pricing policies.
- Don’t mislead the public in your advertising.
If you’re not familiar with the basic rules of the Competition Act, you could find yourself in hot water. Comments made in casual conversation may seem harmless, but could contravene the legislation. The Competition Guide warns particularly about what is called “loose language,” defined as any conversation or phrase that can be interpreted as anti-competitive by nature.
Investigations can be time-consuming and extremely expensive. For this reason alone, compliance with the Competition Act involves avoiding conduct that creates the appearance of illegal activity as much as conduct that actually constitutes illegal activity.
Here are a few examples of statements that can suggest or imply involvement in anti-competitive activity:
- “This is the rate that everyone charges.”
- “I’d like to be lower the commission, but no board member will show your house unless the commission is X per cent.”
- “Before you list with ABC Realty, you should know that no one will work on their listings.”
In relations with clients, brokers and REALTORS® should explain and justify their pricing and other business policies in terms of the value their office provides. Promote your firm’s track record, detail your marketing or negotiating expertise, explain the functions and the value of the services performed by a real estate professional, and defend your qualifications; use the language of competition, not conspiracy.
A copy of the Competition Act is available at http://laws.justice.gc.ca
This article appeared in the May 31 of the Real Estate Board of Greater Vancouver publication REALTORLink. Reprinted with permission.
Editor’s Note: RAHB members can also find valuable information about the Competition Act in the Competition Bureau Information Zone (use the button on RAHB’s home page on REALTOR Link®).