Focus: Does privacy law trump competition law?

All eyes in the competition bar are on a pending Federal Court of Appeal hearing that is setting up a showdown between Canada’s Competition Act and federal privacy legislation, known as PIPEDA, the Personal Information Protection and Electronic Documents Act.

The case is the Toronto Real Estate Board’s appeal of a Competition Tribunal ruling on April 27, which found that TREB’s policies governing the use of the popular multiple listing service database were anti-competitive and constituted an abuse of dominance under s. 79 of the Competition Act.

In The Commissioner of Competition v. The Toronto Real Estate Board, the Tribunal ordered TREB, which has 35,000 members, to make sales and pricing data and historical records more available to agents and consumers.

Chris Naudie, who heads up Osler Hoskin & Harcourt’s LLP competition and privacy litigation practices, says he expects the appeal court will zero in on the novel aspect of how privacy law plays in competition litigation.

“I view the real heart of this as focused on privacy. It’s a really fascinating, interesting decision because of the fact that it raises an issue with the intersection of competition law, intellectual property law, as well as privacy rights,” he says.

The decision facing the court, he says, is “to what extent does the public policy imperative relating to the promotion of competition law override the privacy rights of consumers?” 

The Competition Bureau’s fight with TREB to open the MLS system and allow greater access and use of the data in order to spur new services and competition has been long and hard-fought, and it is likely not over yet. 

Naudie speculates the issue is “meaty” enough to prompt further appeal to the Supreme Court of Canada, despite whichever party prevails at the appeal court hearing. 

Federal Court of Appeal Justice Mary J.L. Gleason felt the issue was so important that, on Aug. 12, she granted an order in The Toronto Real Estate Board v. the Commissioner of Competition expediting TREB’s appeal, which is expected to be heard near the end of the year. She also granted intervener status to the Canadian Real Estate Association, which owns the MLS and REALTOR trademarks.

Gleason suggests the Competition Tribunal gave the privacy argument short shrift, noting that the Tribunal “did not canvas whether the order [it granted] might impact the interests of those who sold or purchased properties some time ago and did not sign consents to having their information disclosed on the Internet.”

She provided lawyers further insight into what lies ahead at the appeal by noting: “To date, the case law has not dealt in any great degree with the interface between competition and privacy law, outside the context of disclosure orders for the purpose of investigations conducted by the Competition Bureau.

“Recognizing that informational privacy can attract constitutional protection . . . and that privacy laws have been held to be quasi-constitutional in nature by the Supreme Court of Canada . . . I cannot say that this ground of appeal does not raise a serious issue. . . .,” she said.

In addition to the privacy aspect, the case also indicates to trade associations and industry organizations that they walk a fine line between promoting and advancing their interests and engaging in conduct that draws the attention of competition regulators.

Subrata Bhattacharjee, a competition lawyer at Borden Ladner Gervais LLP, says the ruling reminds organizations and associations that “making business decisions that have clearly competitive consequences” could be breaching the law.

If an “organization’s goals go beyond things like industry promotion and information, and steps into clearly commercial co-ordinated activities, you have to be mindful of your obligations,” he says.

The MLS fight has been torturous and expensive for both parties, with the Tribunal ordering TREB to pay the Bureau $1.8 million in costs, which is also part of the appeal.

The public spat started in May 2011, when the Competition Bureau challenged restrictions that TREB imposes on its members over the use of the MLS data, which includes limiting what information real estate agents can make available on their web sites. While they can print out, fax and e-mail historical TREB sales information to clients, agents cannot post that data to their own web pages. 

The Bureau argued that denied agents “the ability to introduce innovative real estate brokerage services using the Internet, such as through Virtual Office Websites,” and prevented consumers from being able to search a full inventory of listing information.

In April 2013, after a six-week hearing, the Competition Tribunal dismissed the Bureau’s request for an order that the practices were an abuse of dominance, but the Bureau appealed. 

In 2014, the Federal Court of Appeal set aside the tribunal’s ruling, and referred the matter back to the Tribunal for a re-hearing. TREB appealed that to the Supreme Court of Canada, but the top court refused leave to hear the matter.

At the re-hearing, a newly constituted panel of the Tribunal found TREB’s policies and actions were “motivated primarily by a desire to insulate its Members from disruptive competition,” and it engaged in anti-competitive conduct.

Although TREB argued that privacy concerns motivated it to limit the dissemination of the information, the Bureau pointed out that the information at the heart of the dispute is already distributed by brokers to consumers outside of the Internet.

The Tribunal considered the privacy issue and noted that privacy “may provide a legitimate justification for an impugned practice,” but it found it “difficult to reconcile the privacy concerns that TREB now expresses” based on actions, such as distributing the disputed data to most of the realtors in Ontario and by making it available through fax and e-mail.

Naudie says the upcoming federal court of appeal hearing will be interesting because it will likely canvass the issue of consumer consent to having such information disclosed. 

He notes that under PIPEDA, obtaining consent from consumers to disclose information is a cornerstone to the legislation. There is nothing in the Competition Act, he says, that suggests the Competition Bureau has the “power to override that.” 

Moreover, Naudie notes that privacy is quasi-constitutional in nature, affording it a high degree of protection. 

He says the evidence suggests consumers have not consented to the uses proposed by the Bureau, and that could be a problem. 

“People have the right to privacy in an online world,” he says.LT

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