Settlement talks between Canadian Realtors and regulators over the rules governing Canada’s national Multiple Listing Service (MLS) system have broken down, parties in the dispute said.

The Competition Bureau of Canada says it will file a formal challenge of rules imposed by the Canadian Real Estate Association (CREA) that the Bureau says restrict competition — including prohibitions against real estate agents offering consumers the option to pay a flat fee to list their home on the national MLS system.

Consumers are required to purchase a predetermined set of additional services from a real estate agent, the Bureau said, such as the presentation of offers and negotiation of a final deal.

The Bureau intends to take its case to the Competition Tribunal, a six-member, quasi-judicial body that decides disputes over issues including mergers, misleading advertising and restrictive trade practices.

"The Bureau is focused on striking down these anti-competitive rules, so that real estate agents wishing to offer innovative services can do so, and consumers can benefit from greater choice," said Melanie Aitken, Canada’s Commissioner of Competition, in a press release.

"While the market will ultimately determine prices for residential real estate services, we expect that if the Tribunal strikes down the anti-competitive restrictions, there will be downward pressure on real estate fees in Canada," Aitken said.

CREA — Canada’s version of the National Association of Realtors — issued a statement saying that it was "very disappointing" that several months of settlement negotiations ended without an agreement. …CONTINUED

The group continues to maintain that its rules are not anti-competitive, and "allow for innovative business models and provide a broad range of choice for consumers," CREA said.

But CREA said this week that it had made a "business decision to move forward with rule changes to address the issues raised by the Bureau," despite the failure to reach a settlement.

A CREA spokesman said the group is not publicly disclosing specific rule changes because they have yet to be approved by members.

In an Oct. 29 letter to members, CREA President Dale Ripplinger said regulators were also pushing the group to drop a rule prohibiting the seller’s name and contact information from being listed in the public remarks section of the MLS or on Realtor.ca, the Canadian equivalent of Realtor.com (see story).

The Bureau reportedly also wanted CREA to drop a rule requiring that the listing Realtor receive and present all offers and counteroffers to the seller.

The Competition Bureau has been looking into the rules governing the national MLS since March 2007, when it served CREA with a court order seeking documents and other information (see story). The Bureau has also met with limited-service brokers in the U.S. (see story).

***

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