Government to review Target's Canadian plans

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In this Tuesday, July 16, 2011 photo, an unidentified customer shops at Target Eagle Rock store in Los Angeles. THE CANADIAN PRESS/AP, Damian Dovarganes

TORONTO - The federal government is conducting a review of U.S. retail giant Target Corp.'s proposed move into Canada to determine whether bookshelves and cultural products will carry enough home grown content.

The government review, under the Investment Canada Act, was ordered by Heritage Minister James Moore, said department spokesman James Maunder.

"The Investment Act requires foreign investments in the ... book industry to be of net cultural benefit to Canada," he said.

The review stems from an order by the Privy Council Office on Mar. 27, which found it "in the public interest" to review Target's investment in Canada.

Target said Thursday that the review will focus on its planned retailing of cultural products, including books, DVDs, music and magazines.

"Target looks forward to working with the Department of Cultural Heritage regarding the retailing of cultural products," spokeswoman Lisa Gibson said in a statement.

The American retail giant (NYSE:TGT) is poised to begin opening the first of between 125 and 135 stores in Canada at former Zellers locations acquired from Hudson's Bay Co.

The store openings are set to start next year.

Because the deal was purely a real estate transaction, it did not meet the threshold for concern from Industry Canada — which often launches foreign investment reviews, said Margaux Stastny, director of communications for Industry Minister Christian Paradis.

"The transaction between Zellers and Target was a real estate transaction and not the acquisition of a business, assets, technology, or employees," she said.

Its not the first time Moore has ordered an Investment Canada Act review of a U.S. retailing behemoth's plans to move north of the border.

His department ordered a review of online book seller Amazon's (NYSE:AMZN) proposal to set up a "fulfilment centre'' warehouse in Canada in 2010.

The move was approved, with the condition that Amazon invest more than $20 million, including $1.5 million for cultural events and awards and for promoting Canadian-authored books abroad.

Amazon's commitment also includes adding Canadian jobs, improving service for Canadian consumers, and increasing the visibility of Canadian and French-language products on its Canadian website.

Many independent authors, booksellers and publishers had been wary that Amazon's arrival would mean even more American dominance in Canada's book industry and would diminish the market for Canadian content.

Canada's Indigo Books & Music Inc. (TSX:IDG) decision to sell the e-reader company Kobo Inc. to Japanese e-commerce company Rakuten Inc. for US$315 million was also reviewed and approved under the act.

Target's proposed arrival on Canadian soil comes as more American chains set their sights on the allure of a relatively stable Canadian economy and steadier consumer confidence.

Target, a 109-year old American retailer that was part of Dayton-Hudson Corp. before changing its name in 2000, is one of the biggest U.S. department store chains, with revenues of more than US$67 billion in its last fiscal year.

The company has more than 355,000 employees and 1,763 stores and is the second-biggest discount retailer in the U.S. after Wal-Mart Stores Inc.