Ireland: Internet domain name agreements to be examined by EU anti-trust authority

Licensing agreements to be entered into between Network Solutions Inc. ("NSI") and test bed registrars of second-level Internet domain names in the .com, .org and .net domains are to be examined by EU anti-trust officials. These licensing agreements are set to be temporary and to be amended and approved by the United States (US) Department of Commerce.

The EU Commission’s Directorate-General on Competition (DGIV), making its annoucement on 29th July 1999 has stated that the purpose of the examination of the agreements to ascertain whether the licensing agreements fall within the scope of Article 81 (1) EC Treaty (formerly Article 85 (1) of the Treaty of Rome).which prohibit agreements restrictive of competition. Certain provisions in the agreements or related actions taken by NSI might also constitute an abuse of NSI's dominant position under Article 82 EC Treaty (formerly Article 85 (1) of the Treaty of Rome).

NSI operates the .com domain on an exclusive basis pursuant to an agreement with the US Government which is due to expire this year. As part of the phasing-in of a new regime liberalising the registration system for the .com domain, NSI was by 26 April 1999 to establish a test bed supporting actual registrations in .com, .net, and .org with 5 newregistrars . These registrars were to be accredited by ICANN (the Internet Corporation for Assigned Names and Numbers). ICANN , a not for profit organisation, was recently formed to take responsibilty for the management of the domain name system.

The liberalisation is to be implemented thanks to a system supported by the US Department of Commerce called the Shared Registration System ("SRS"). To implement this system and allow for competing registrars, NSI was (directly or indirectly) to develop a protocol and associated software supporting a system that permits multiple registrars to provide registration services for the registry of the existing .com domain.

The licensing by NSI to registrars of such protocol and software is the purpose of the NSI-registrar standard licensing agreement published on 21 April 1999 by the US Department of Commerce. On the basis of that standard licensing agreement, NSI has entered into agreements with the five test bed registrars selected and accredited by ICANN. These agreements are aimed at enabling the latter to register second-level domain names within the registry of Top-Level Domain Names managed by NSI such as .com, .org and .net. Thereby NSI licences to those companies the necessary software, application programming interfaces and protocols enabling these companies to access the NSI Shared Registry System.

While the EU has always welcomed liberalisation of the domain name process, DGIV has identified a certain number of clauses in that standard NSI-Registrar licensing agreement that may raise anti-competitive concerns and these will be focus of its examination. The Commission's Directorate-General for Competition (DG IV) has informed the US Department of Justice and the US Department of Commerce that it has raised a number of concerns and questions related to the licensing agreements as well as details on some recent related developments in the Internet field.

The decision to investigate the compatibility of these agreements with EU anti-trust law mirrors the US Department of Commerce’s view that greater competition should be introduced into the allocation of domain names in the .com, .net and .org domains. As the Internet increases in commercial importance, more attention will inevitably be focused on issues connected with the allocation of domain names, particularly in the valuable .com domain.

For more information please contact

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.