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Amazon seeks permission to open a 'new Canadian business'
03.03.10 | Emma Jackson
Amazon is seeking to set up a physical base in Canada, The Bookseller can reveal, and has applied to the government to open a "new Canadian business".
The move could lead to a huge shake-up of Canada's book trade. Amazon.com does not have a physical operation in the country, but sells books through its domain Amazon.ca. Moving into the country would mean the company could ship to Canadian consumers more quickly and cost-effectively. But to operate there, Amazon must receive permission from Canada's heritage ministry.
The application is subject to a confidential inquiry by the Canadian government, which will assess whether it breaks Canada's tough cultural protection rules, which are designed to prevent American influences from overpowering Canada's culture.
According to Privy Council documents seen by The Bookseller, an inquiry ordered by Canada's governor general (The Queen's representative in the country) under the Investment Canada Act will probe "investment by Amazon.com Inc to establish a new Canadian business carried on by Amazon Fulfillment Services Canada Inc".
Amazon spokesperson Mary Osako confirmed that an application had been made, but declined to say what it planned to sell through the new company and services. "We're always looking for new ways to serve our Canadian customers, but it's premature to discuss our plans as we await a ruling on our application," she said.
Amazon's proposal was issued on 27th January, and could take 45 days to "determine if it will be of direct cultural benefit to Canada", according to Tim Warmington, media relations officer for Canadian Heritage. He declined to offer more details, as the information is protected by the Investment Canada Act.
The move could prove to be a boon to Canadian publishers, but it would also hit the country's retailers. Dominant Canadian bookseller Indigo declined to comment.
Carolyn Wood, director at the Association of Canadian Publishers, said: "There's a belief that Canadian-owned retailers will be more likely to promote Canadian books," Wood said. "(Amazon) presumably will have to commit to a business model that proves it is in net benefit to Canadians." But Wood said it would be difficult for Indigo's online business, indigo.ca, to compete with a Canadian-based Amazon. "It has been difficult to compete with Amazon.ca as it is," she said. "It will be a challenge."
Amazon launched its Canadian site in June 2002, amid protests from Canadian booksellers who argued that the online store violated regulations that prohibit foreign ownership. The Canadian government ruled that this was not the case since Amazon.com did not have a physical business in the country.