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Right Of The Dot gets legal opinion: new gTLD auctions not illegal

Kevin Murphy, April 4, 2013, 17:22:30 (UTC), Domain Services

Right Of The Dot, one of the companies hoping to offer contention set resolution services to new gTLD applicants, has published a legal opinion arguing that auctions are not inherently illegal.

The document was issued in response to Uniregistry’s claim that the US Department of Justice has refused to give auctions a green light under antitrust law.

ROTD hired the law firm Lewis Brisbois Bisgaard & Smith, including a partner with DoJ experience, to draft the statement.

It’s aimed at lawyers, primarily, but the gist of it is that simply participating in an auction is not illegal in and of itself — participants would have to collude in some other way too.

It states:

The finding of an antitrust violation necessarily would depend on a showing that the private auction unreasonably restrained interstate trade or commerce.

The question comes down to the conduct of the parties to an auction, be it a private auction or an ICANN Last Resort Auction.

If the parties to an auction, engage in collusion such as price fixing and/or bid rigging, it constitute per se violations of Section 1 of the Sherman Act.

It’s not the auction provider that creates a violation it’s the action of the parties to an auction and those actions can take place in an ICANN Last Resort auction.

In other words, there’s no difference between an ICANN-run auction, in which ICANN gets paid, and a private auction in which the participants and the auctioneer get paid, according to these lawyers.

Uniregistry’s argument as I understand it, on the other hand, is that simply participating in an action that could constitute illegal collusion, because ICANN ends up out of pocket.

Who’s right? Who’s wrong?

I think the only person who could answer that, in light of the DoJ’s refusal to intervene, would be a judge. We’re unlikely to get an answer unless somebody sues somebody.

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Comments (2)

  1. MarkA says:

    I read the ROTD release which was really serpentine and conditional vs Unireg’s.

    Back in the real World the DoJ has been busy arresting people in distress real estate auction settings where the participants and the auctioneer get paid: http://www.justice.gov/atr/public/press_releases/2013/294391.htm

    If ROTD and Lewis Brisbois Bisgaard & Smith feel strongly about this, they might get more traction by indemnifying participants of their auction.

  2. With the advent of the new gTLDS being introduced, its effect will severely impact the Search Engine Marketing Sector. According to MIT (Mass. Inst.Tech.) type-In traffic will be expanded rapidly and will be common place. Consumers are very reluctant to change and there are studies to prove that they will avoid doing business on a non-.COM site. This splintering and dividing of the Search Engine Market bodes well for a brilliant future, for Pure Play Generic .COM Profit Centers. M I T foresees Type-Ins, We foresee a seachange shift into .COM Profit Centers.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

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