Amazon.ca Overcomes Legal Hurdle

The Department of Canadian Heritage announced on July 10th, 2002 that Amazon.ca did not break Canadian foreign investment rules by setting up shop in Canada. As previously reported in E-TIPS, the Department of Canadian Heritage had launched an investigation to determine whether Amazon.ca fell under the jurisdiction of the Investment Canada Act, which requires booksellers to be majority-owned by Canadians. In coming to its decision, the DCH determined that the Canadian bookselling laws only applied to companies that have Canadian employees, assets and a Canadian business address. In particular, the DCH concluded 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. Whether or not the company held a ".ca" Canadian Internet address was not relevant to the law." However, the above finding raises the interesting question of how did Amazon.ca qualify for the .ca domain name with its Canadian presence requirements if it is not a Canadian business. The Canadian Booksellers Association, a vocal opponent of Amazon.ca., has insisted that the current Canadian legislation regarding booksellers should be reviewed. A number of book selling rivals argue that the federal government has violated its own policies by allowing Amazon.ca to set up the site. Canadian Booksellers Association: http://www.cbabook.org/default.asp. Department of Canadian Heritage: http://www.pch.gc.ca/mindep/english.htm. To view a copy of the Investment Canada Act, visit: http://laws.justice.gc.ca/en/publaw/46133_14104.html.