What we say matters. Words have a lasting impact and have the power to influence and cause harm. How you talk about the commission you receive, will receive, and have received needs to be considered carefully to remain compliant with the Competition Act.

Recently, a claim was filed against the Toronto Regional Real Estate Board (TRREB) and CREA, alleging conspiracy and price fixing that would, if proven, violate the Competition Act. The case centres around the claim of standardized commissions. At first glance, it bears a striking resemblance to a class action suit in the USA which CREA and all Canadian real estate boards and associations are watching carefully.

This REM article is worth a read if you’re interested in the differences between the American Anti-Trust provisions and the Canadian Competition Law that may impact their respective case.

Outside of the similarities and differences between the cross-border cases, these claims are a strong reminder that REALTORS^® must be aware of how, when and to whom they speak about commissions.

Avoid loose-language

Regardless of your commission model, avoid using language suggesting a ‘standard’ because there’s not. Using language that suggests a ‘standard,’ ‘common,’ ‘set,’ or ‘usual’ compensation could create the appearance of collusion to set a price.

DON’T:

• Ask what another firm’s commission rates are;
• Make any indication that there’s a rate everyone charges; or
• Suggest certain compensation rates will make a property less appealing.

DO

• Focus on your value proposition;
• Remember commissions are negotiable; and
• Speak about your specific model instead of other people’s models.

Know when to get out

Have you ever been in a discussion where you knew your best move would be to walk away from the conversation? Discussions with other firms or members regarding commissions should fall into this category. While negotiating cooperating commissions on a specific transaction with the REALTOR^® on the other side is acceptable, it’s the general discussions about commissions that REALTORS^® need to be mindful of.

CREA’s Real Estate Competition Guide states:

Discussions with competitors about commission fees, calculation of compensation, and commission splits can result in allegations of “price fixing,” which is prohibited by the criminal conspiracy provisions.

Having an extraction plan in the back of your mind is helpful if you need to exit a general conversation about commissions gracefully. If you’re hosting a meeting, it’s beneficial to remind attendees at the onset of the meeting that discussions need to be competition aware; consider integrating something like the following into all your meetings to cover your bases:

We promote compliance with Canadian competition law, and any discussion of topics such as the pricing of services, business models, or any other topics that could potentially involve restrictive business practices will not be tolerated. Failure to abide by this requirement may result in enforcement action under the Competition Act and consequences under the REALTOR^® Code.

Sure, it might be uncomfortable the first couple of times you incorporate this into your meetings, but it’s probably much less uncomfortable than being investigated by the Competition Bureau.