Translations:Registry/11/en

EC Concerns Over the Full Removal of Vertical Separation

On June 17, 2011, the Information Society and Media Directorate General of the European Commission (EC) submitted a non-paper regarding ICANN's proposed full removal of the vertical separation to the ICANN Board. Copies were furnished to the U.S. NTIA Assistant Secretary Larry Strickling and to Assistant Attorney General Christine Varney of the Department of Justice Antitrust Division. The EC cited some issues and recommendations, which include:

• Vertical separation provides a balanced playing field for competition between registrars. The absence of expert advice to remove vertical separation and stakeholders consensus shows that the move may be premature and might result in negative market output for consumers.
• Vertical Integration might harm competition. The European Commission cited the CRA International Report of 2008, which emphasized the risk of vertical integration wherein registries may discriminate independent registrars by lowering prices and providing better registry services to their affiliate registrars.
• ICANN does not have sufficient data to support the full removal of vertical separation.
• A consensus on the issue within the GNSO and internet stakeholders is lacking.
• The procedural approach of ICANN to refer an application to relevant antitrust authorities for "expert analysis and ante determination" overlooks the fact that competition authorities have limited powers in implementing rules, which is based on a case to case market analysis. ICANN did not clearly identify specific laws that will serve as basis of its jurisdiction to determine if there are concerns regarding competition. Referral to competition authorities depends on ICANN's discretion.