This post was also written by Brad R. Newberg and Gregory S. Shatan.
For several years now, we have been tracking the tortuous road that ICANN (Internet Corporation for Assigned Names and Numbers) has been traveling to make good on its promise, or its threat (depending on your perspective), starting this spring, to expand exponentially the number of available top level domains (TLDs) – those letters that appear to the right of the dot in an Internet address. Throughout ICANN’s journey, which has been fraught with controversy since its inception, those opposing ICANN’s plans have primarily focused on the ways in which this expansion would exacerbate the already enormous problems of cybersquatting and cyber-crime, contribute to the theft of intellectual property, and further add to serious concerns about cyber-security.
The Federal Trade Commission, for example, has been a tenacious thorn in ICANN’s side, but most, if not all, of its criticism to date has been on the consumer protection side of its house. The FTC, however, also shares with the Justice Department, responsibility for protecting competition. For almost a year, we have been warning that ICANN’s plans not only threaten to make the Internet a far more dangerous place for consumers, but could also pose substantial antitrust risk, both for those seeking to buy and operate new TLDs, and for those who might find new TLDs being owned and operated by their competitors.
In a book chapter written last summer, we stated, among other things, “It is already apparent that the potential opportunities to run afoul of the antitrust laws in this expansion of TLDs are numerous. For example, ICANN has encouraged applicants who find they are competing with others for a particular string to enter into private negotiations to resolve the conflict themselves and obviate the need for an auction, which is ICANN’s plan of last resort to ‘choose’ between or among overlapping applications.”
On March 19, Uniregistry, Corp. an entity that has applied for a whole portfolio of TLDs, announced that the Justice Department’s Antitrust Division had declined Uniregistry’s October request to issue a business review of various private gTLD contention resolution mechanisms. According to Uniregistry’s press release, “In making its decision, the Department emphasized that no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws.” The press release continued, “The Department of Justice further advised that arrangements by which private parties agree to resolve gTLD string contentions solely to avoid a public auction present antitrust issues.”
The Department advised anyone interested in the issue of private auctions or other non-public arrangements to seek the advice of counsel, and to obtain review of relevant state laws and the laws of foreign governments (in addition to the federal antitrust laws). As the Justice Department reportedly explained to Uniregistry, the Department’s decision means that it reserves the right to prosecute and/or seek civil penalties from individuals or entities that participate in anti-competitive schemes in violation of applicable antitrust laws.