Company says private auctions do not automatically violate U.S. antitrust law.

Last month new TLD applicant Uniregistry published a press release that announced it would not participate in private auctions for new TLDs due to anti-trust concerns. It based its decision on a verbal conversation with the Department of Justice.

The press release also suggested that “paying off” other new TLD applicants might run afoul of the law.

The release generated an immediate reaction from applicants planning to participate in new TLD auctions as well as service providers hoping to run those auctions. Many questioned Uniregistry’s motives.

Right of the Dot, one of the companies that wants to offer private auctions, has now made a formal response to the antitrust and bid rigging claims. The response was prepared by the company with the assistance of two partners at Lewis Brisbois Bisgaard & Smith LLP, including a former prosecutor with the U.S. Department of Justice.

You can read the entire letter here. I found a footnote to be the most interesting:

    We have confirmed through counsel that DOJ has never taken a position on the legality or illegality of the private auction to settle contention disputes. Rather, DOJ has simply directed parties to the pertinent antitrust laws so that the parties can assess whether the forum allows for or encourages abuse. Indeed, it is worth noting that, after more than a billion dollars in domain name auctions, we know of no DOJ prosecution for price fixing or bid rigging.

The last sentence is a non sequitur because these auctions are different than a regular domain auction, but ROTD is reiterating that the DOJ is not taking a position on the matter. Uniregistry said the same thing — but drew different conclusions from it.

In the wake of the Uniregistry release I attempted (and failed) to get a response from the Department of Justice. I also talked to two antitrust lawyers, who questioned why the Department of Justice would pursue a case in which none of the parties, including ICANN (which would technically “lose out” on revenue from a private auction) believed they were harmed.

In order for a private auction to serve its purpose, all contenders for the new TLD must participate. If they don’t wish to participate, they can just say ‘no’. That makes me scratch my head as to why some parties would openly discourage the process. I’ve talked to several competing applicants to understand the motive, and they don’t know the competitive logic, either.

One idea is that companies that participate in other contention set auctions can be enriched in the process (because the losers get some of the spoils) that would help them compete in other auctions. Or perhaps the motive is to warn off competitors that hope to get paid off in some way.