Canadian group throws book at Amazon

A Canadian booksellers group is protesting Amazon.com's move into Canada, saying the new online store violates regulations that prohibit foreign ownership.

The Canadian Booksellers Association, along with Indigo Books & Music, has filed an application for judicial review with the Canadian Federal Court, asking the court to declare that Amazon is subject to the Investment Canada Act and the government?s book policy.

Amazon launched its Canadian site in June. The company has been working with Canadian companies to get around rules that prohibit foreign companies from establishing a physical presence in Canada on their own and that require them to operate businesses jointly with Canadian companies. Amazon has partnered with a division of Canada Post, the Canadian equivalent to the U.S. Postal Service, to handle much of the distribution for the new site.

Amazon previously sold books, music and videos to Canadians, but the move into Canada itself allows Amazon to save money on shipping costs.

Todd Anderson, president of the Canadian Booksellers Association, said in a statement that it was "especially troubling" that Amazon was using the Canada Post to "circumvent the act and to permit (Amazon) to implement a massive onslaught into this Canadian cultural industry. Even more egregious is Canada Post?s direct participation in the promotion of Amazon throughout Canada."

He added that the associations members, "including hundreds of small and medium-sized urban and rural retail bookstores, are being denied the intent that the act and book policy were intended to provide."

The Department of Canadian Heritage ruled in July that Amazon's entry was not subject to the Investment Canada Act, stating that "in order for the Investment Canada Act to apply to an investment by a non-Canadian, the investment must involve the establishment of a new Canadian business or the acquisition of control of an existing Canadian business."

Noting the heritage department's decision, Amazon spokeswoman Carrie Peters said the company believes the action taken by the Canadian booksellers is "without merit." Although Amazon does not have any equipment or employees in Canada, the company has customized its Canadian site for Canadians, she said. Many of the products on the site come from Canadian publishers and distributors, she said. Peters didn't know the percentage of Canadian products on the site.

"We believe that the site is good for Canadian cultural products and good for Canadian customers," Peters said.

Staff writer Troy Wolverton contributed to this report.