Amazon.com seeks Canadian foothold

TORONTO -- Efforts to pry open the culturally sensitive Canadian media industry to more foreign ownership continue with Amazon.com asking Ottawa for permission to start a new business in Canada.

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The application to Heritage Canada, if approved by the feds, would see the U.S. online retailer establish its own fulfillment business here after using Canada Post for product delivery since 2002 to serve a Canadian version of its U.S. website, Amazon.ca.

Amazon is seeking its own physical base in Canada, including offices and warehouses, a move that must be weighed by the federal government under the Investment Canada Act.

Establishing a physical presence north of the border would come with strings attached, including measures to support the Canadian book trade to indicate "net benefits" to the local industry from Amazon.com operating in the country.

Ottawa in 2002 ruled that the Investment Canada Act did not apply to Amazon.com, despite existing laws aiming to protect the Canadian book industry from foreign competition, as long as it operated without a physical presence in the country.

The Canadian Booksellers Association, representing local book retailers, in 2002 failed in a judicial bid to stop Amazon.com from operating in Canada.

Beyond book-selling, Canada also regulates foreign investment in the phone and broadcasting sectors, both of which face changing foreign ownership rules and landscapes as well.

Quebecor Media, the Quebec cable giant, is to launch a mobile phone service in the French-speaking province, and rival cable operator Shaw Communications has plans to launch its own mobile phone network in western Canada.

Both moves follow Ottawa re-jigging the local telecom market by allowing Globalive Wireless to enter the national mobile phone market with Egyptian operator Orascom Telecom as its main backer (HR, Oct 7/09).

And debt-laden broadcaster Canwest Global Communications Corp. continues attempts to complete a court-directed restructuring that includes infighting between senior lender Goldman Sachs & Co. and U.S. bondholders as it attempts to stay within the country's strict foreign ownership rules.

Canadian foreign ownership rules could eventually be relaxed, or even scrapped, after the federal government last week signaled it will look to open the floodgates to more foreign investment in Canada's communications industry (HR, March 4)