We have been advocating lower filing fees and higher review thresholds under the Competition Act since 2003. We are concerned with the methodology applied by the Competition Bureau to define both product and market in the real estate context. The competition bureau charges a $50,000 flat fee, which we believe is unfair for reviewing real estate transactions. It was previously $25,000, itself an unfair fee.
Position:
We believe that the application fees are unreasonable, and the incidences of concern are rare.
The data clearly shows that the $50,000 flat fee is unfair for non-complex transactions. There is also no data to suggest that Competition problems arise from large commercial real property transactions. In our reviews of available Annual Reports from the Competition Bureau dating back to 1984 and cases heard before the Competition Tribunal, not a single case can be found involving real estate.
As we believe real estate transactions fall into the "non-complex" category, the government should re-consider exempting all real estate transactions, as is the case in the . The data reinforces that there is no justification for continuing to penalize the real estate sector with high flat fees and an extremely low incidence of reviewable transactions.
The Bureau should dramatically reduce or eliminate transaction fees for real estate transactions above the threshold limit.
Background:
In April 2003, the Competition Bureau changed its fee and transaction threshold. The threshold increased from $35 million to $50 million and the fee doubled from $25,000.00 to $50,000.00. RealPac lobbied for reduced fees and a $70 million threshold or an outright exemption.
On November 2nd, 2004 we attended the “Competition Bureau Consultation on Fees and Services Standards.” Surprisingly, the Bureau voluntarily disclosed some damning data about their workload and the revenue sources; the exact information that was not available to the public 2 years ago.
Over 85% of annual transactions processed by the bureau are classified as non-complex. Non-complex transactions have a service turnaround of only 2 weeks and require minimal resources on the part of the Bureau. Likely, almost all of the real estate transactions reviewed by the Bureau were non-complex.
The bureau presumes that, for any given real estate market and any given real estate product, that you can isolate dependent and independent variables sufficiently enough to be able to state, unequivocally, that any price is a result of the exercise of monopoly power.
According to the Competition Bureau’s own data, over the last 4 years, the number of transactions processed by the Competition Bureau has steadily declined from 314 (2000-2001) to 185 (2003-2004) or a 41% decrease in the transactions previously processed (Source: Competition Bureau: Merger Review Performance Report 2004, pg. 7). During this same period, revenue increased from $7.5 million to $8.8 million. (Source: Competition Bureau: Merger Review Performance Report 2004, pg. 7). This equals a percentage revenue increase of 17.3%. It is not clear, accordingly, what the administrative case was for raising fees 2 years ago because this data would suggest a reduced workload. We also note that despite the decrease in transactions processed, the number of staff remained constant at approximately 58 people.
