10 Foreign Influence

As noted above, initially French-language books in Canada were distributed mostly by foreign companies. In 1970, although there were a substantial number of small distribution companies, four major distributors dominated the market: MIL (subsidiary of Hachette), Socadis (Gallimard/Flammarion joint venture), Les Presses de la Cité and L'Agence de distribution populaire (ADP, founded in 1961 to distribute Les Éditions de l'Homme). Only one, ADP, was Canadian-owned, and only Socadis and ADP are still around today. The 1970s also saw the appearance of new predominantly Canadian-owned players¹ that are today among the largest distribution companies, particularly Dimedia (1974) and Prologue (1976).²

Thus, over the years, the book distribution sector in Quebec and French Canada has changed from being predominantly foreign-owned to being predominantly Canadian-owned. Of the major distribution companies, only Socadis is foreign-owned (and, among medium-sized businesses, Diffusion du Livre Mirabel). Socadis, owned by Gallimard and Flammarion, concentrates on distribution — and excludes diffusion — in particular distribution of its two owners and Hachette, and a growing number of Quebec and foreign publishers. Socadis is also one of the three major distribution companies serving the mass-market channels, and it has concluded specific agreements with several distributors for the mass-market channels.

It seems that neither foreign ownership nor parallel imports (importing books into Canada that are published legally in their country of origin, but are imported without permission from the rights holder into Canada) is an issue for the French-language book distribution sector in Canada. All distributors interviewed consider, for example, that having Socadis in the Canadian market does not change anything specific in the competition among distributors, and that the ownership of Socadis does not give it any particular advantage. Most of its catalogue does come from foreign publishers, but this situation can be explained by the fact that the business does distribution only, and that foreign publishers — more particularly French publishers — are more accustomed to doing diffusion and distribution separately in their own country. Socadis also distributes a significant number of Canadian publishers, particularly in mass-market channels. When questioned about the impact of a hypothetical change in a distributor's ownership in favour of a foreign owner, the same distributors state that they would regret that distribution had become less Canadian-owned, but claim that the terms of competition would not change.

On the other hand, foreign ownership is not the only possible impact from the foreign book industry on the French-language book trade in Canada. Indeed, the greatest changes experienced by Quebec distributors became necessary not because of the performance of the distributors involved, but because of transactions that took place abroad — mainly in France–involving the foreign publishers they distribute in Canada. Thus, Canadian distributors have seen a significant portion of their foreign catalogue moving to a Canadian competitor because the foreign publisher was sold to a group distributed in Canada by their competitor.

The changes involving the Canadian distribution of the two best-known French dictionaries (Le Robert and Larousse) clearly illustrate this influence of foreign transactions on book distribution in Canada. Until 2004, the Larousse dictionary was distributed in Canada by ADP, owned by the Sogides Group. It was then bought out in France by Hachette. However, Hachette is distributed in Canada by Socadis. As a result, ADP lost distribution rights for Larousse, including Le Petit Larousse, which alone has sales of some 50,000 copies per year. Sogides then turned to Le Robert, owned by Interforum. While Interforum was distributed by Sogides, Le Robert was distributed by Dimedia in the bookstore channel to avoid having both major dictionaries handled by the same distributor. Le Robert was therefore moved from Dimedia to Sogides for the bookstore channel, which was a major blow to Dimedia.

Although foreign investment in the French-language book distribution sector in Canada is not specifically an issue for the industry, we must not therefore conclude that there is no danger of important players in the French-Canadian book trade being taken over by foreign owners, which would have a major impact on the sector. Indeed, the concentration of several book trade companies into large groups could expose them to a transfer to foreign owners in the event that the group is sold as a unit. These groups have become so large that it is possible that no Canadian purchaser could afford to acquire one.

To this effect, the Investment Canada Act provides that any acquisition by a non-Canadian of a Canadian business in the book trade must be compatible with domestic cultural policy and be to Canada's net advantage. Thus, as a general rule, "Acquisition of an existing Canadian-controlled business by a non-Canadian will not be permitted."³ However, the policy specifies that the government could make an exception to this general rule if "Canadians have had full and fair opportunity to purchase and the business is in clear financial distress." However, several large groups in the book trade have now reached such a size that, in the event of a sale, its purchase could exceed the financial ability of their Canadian competitors. In the event that the group were sold — or that the business group that owns the publishing group were sold — it is possible that no Canadian could become the purchaser, which could bring pressure on the Government of Canada to authorize the acquisition of the group by a non-Canadian, resulting in an exception to the policy. Although large economic units, with their improved investment capacity and greater presence on domestic and foreign markets, strengthen the Canadian book industry, this concentration and integration increase the risk that a portion of the Canadian book industry will fall under foreign control despite the policy.

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