The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit e

Question

The Internet Corporation for Assigned Names and Numbers

(ICANN) is a nonprofit entity that organizes Internet domain

names. It is governed by a board of directors elected by

various groups with commercial interests in the Internet.

One of ICANN’s functions is to authorize an entity to serve

as a registrar for certain “Top Level Domains” (TLDs). ICANN

entered into an agreement with VeriSign to provide registry

services in accordance with ICANN’s specifications. VeriSign

complained that ICANN was restricting the services that it

could make available as a registrar and was blocking new

services, imposing unnecessary conditions on those services,

and setting prices at which the services were offered.

VeriSign claimed that ICANN’s control of the registry

services for domain names violated Section 1 of the Sherman

Act. Using the information presented in the chapter, answer

the following questions.

1. Should ICANN’s actions be judged under the rule of reason

or deemed a per se violation of Section 1 of the Sherman

Act?

2. Should ICANN’s actions be viewed as a horizontal or a

vertical restraint of trade?

3. Does it matter that ICANN’s leadership is chosen by those

with a commercial interest in the Internet?

4. If the dispute is judged under the rule of reason, what

might be ICANN’s defense for having a standardized set of

registry services that must be used?

Explanation / Answer

1-ICANN's doesnot fit for section 1 of Sherman act because it is not restricting trade and commerce among the players.Here is the issue of rule of ICANN which VeriSign think is not proper according to VeriSign.It is related to the terms of the contract of Verisign as a register.It should be treated as rule of reason.

2-It is a vertical restraint of trade because ICANN isin higher position than VeriSign in value addition ladder.In the distribution channel ICANN being the host of distribution of domain name is superior because it allocate certain function to VeriSign which is a vendor of the former. Both of these organization are in different level of distribution.

3-It doesnot matter because though the board of directors are elected by  the groups with commercial interests in the Internet, it is not restricting trade and doesnot discriminate to allow domain name to certain parties only.If the working of the board is only for fulfiling the wish of these firms then it will be regarded as anti-trust.

4-ICANN being the distributor of domain name and Verisign is a vendor of it so ICANN can sets its rule for  promoting competition rather than suppressing it.

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