The Canadian real estate sector is currently under a microscope. In a significant shift, Canada's Competition Bureau has intensified its enforcement activities, targeting long-standing practices in both commercial and residential markets. This new focus, driven by the federal government's mandate to address national affordability concerns, has introduced critical changes that property owners, investors, and landlords must understand.

This article provides a detailed breakdown of the Bureau's recent actions, including specific dates, legal provisions, and real-world examples, to help our clients at Coldwell Banker Horizon Realty navigate this evolving regulatory landscape.

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Part I: The Bureau's Final Guidance on "Property Controls"

On June 4, 2025, the Bureau released its final guidance on "property controls," signaling a fundamental challenge to two common real estate tools:

• Exclusivity Clauses: Provisions within commercial leases that restrict a landlord from leasing nearby space to a competitor of an existing tenant.
• Restrictive Covenants: Legal restrictions registered on a property's title that dictate how the land can be used by future owners, often to prevent competition with a previous owner's business.

The Bureau's stance is that these controls, while widespread, can create significant barriers to market entry and harm competition. It now considers them justifiable only in limited situations and has laid out four key factors for assessing their legitimacy:

1. Necessity: Is the control essential to enable new market entry or a significant investment?
2. Duration: How long does the restriction last?
3. Geographic Scope: How large is the area covered by the restriction?
4. Product Scope: What specific products or services are restricted?

The overarching principle is that any control must be narrowly tailored and no more restrictive than absolutely necessary to achieve a pro-competitive goal. The Bureau has expressed particular concern over restrictive covenants, which can encumber a property indefinitely and are now likely to face the highest level of scrutiny.

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New Legal Tools and Enforcement in Action

The Bureau is leveraging amended provisions of the Competition Act to enforce these guidelines. The updated Section 90.1 is particularly noteworthy, as it now allows the Bureau to challenge anti-competitive agreements between non-competitors (such as a landlord and a tenant). This lowers the bar for initiating a challenge, as the Bureau no longer needs to prove a company is "dominant" in its market, although demonstrating "substantial harm to competition" remains a requirement.

The potential penalties are severe, including prohibition orders, structural remedies to restore competition, and significant Administrative Monetary Penalties (AMPs).

The Bureau's seriousness is already evident in its recent actions in the grocery sector. In one case, a grocer in a rural Southern Alberta town agreed to remove a restrictive property control. In a more sweeping resolution, another major grocer made several commitments, including:

• Eliminating all of its restrictive covenants across Canada.
• Waiving exclusivity clauses in any region where it operates the only grocery store.
• Agreeing not to enforce exclusivity against tenants selling complementary products, such as a local bakery or butcher.

These resolutions provide a clear blueprint for the Bureau's expectations: a strong aversion to restrictive covenants and a demand for narrowly defined exclusivity clauses, especially for businesses with significant market share.

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Part II: The Bureau's Warning on Rental Market Collusion

On June 25, 2025, the Bureau issued a direct and stern warning to residential landlords and property managers regarding anti-competitive communication. The Bureau stated it is aware of discussions among competitors—often on social media or in private groups—about rental pricing and terms.

Under the Competition Act, it is a criminal offense for competitors to form agreements to:

• Fix, maintain, or control prices (including rental rates, increases, or surcharges).
• Allocate markets or customers (e.g., agreeing not to compete for certain types of tenants).
• Restrict or limit supply (e.g., colluding to keep rental units off the market to inflate prices).

This type of conduct is considered a "cartel" conspiracy and is per se illegal, meaning the act of agreeing is itself a crime, regardless of whether it was successful or caused demonstrable harm. The consequences can include substantial fines, imprisonment of up to 14 years, and exposure to major class-action lawsuits.

This warning is part of a broader investigation into rental market practices. On February 18, 2025, the Bureau confirmed it is formally investigating the use of AI-driven algorithmic pricing software by landlords, following a directive from the Minister of Innovation, Science and Industry in November 2024.

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Proactive Compliance is Essential

The regulatory ground has shifted. For real estate stakeholders, the key takeaway is the urgent need for proactive review and compliance.

• For Commercial Property Owners & Tenants: A comprehensive audit of your lease portfolio is now a prudent business practice. Clauses that were once standard may now carry unacceptable risk.
• For Residential Landlords: All pricing, term-setting, and supply decisions must be made independently. Any communication with competitors regarding these business decisions is now firmly in the high-risk category.
• For Investors & Developers: These new enforcement actions may create opportunities. Land previously encumbered by a restrictive covenant may now be available for development, opening up new possibilities for savvy investors who understand the new rules.

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Navigating this more stringent regulatory environment requires expertise and diligence. At Coldwell Banker Horizon Realty, we are committed to providing our clients with the most current information and strategic advice to ensure your real estate activities are not only profitable but also fully compliant with the law.