Kieren McCarthy published a post yesterday entitled “The Great British domain name rip-off: Overcharged .uk customers help pay for cheaper .vodka; Time for competition authorities to take a hard look at Nominet”

Here are some of the highlights of the story “.UK domain name holders are being overcharged while the company behind it wins contracts by undercutting the market in what may be illegal market abuse.”

In recent months, Nominet has signed a number of contracts with commercial operators of dozens of internet extensions ranging from .boston to .vodka (Minds + Machines extensions).

“However, industry experts are warning that those deals were likely won by Nominet offering below-market rates, effectively using the company’s vast profits from the .uk registry to cross-subsidise its commercial ambitions.”

“Such behaviour almost certainly runs foul of UK competition law and after months of stonewalling by the company, some of Nominet’s competitors are now considering lodging a formal complaint with the Competition and Markets Authority (CMA).”

“Under UK competition rules, Nominet holds a “dominant position” in the UK domain name market. By its own reckoning, the company controls “approximately 60% of the domain name market in the UK.”

“There is of course nothing illegal about holding a dominant position in a market, but under the law it comes with an undertaking not to impair competition or distort the market.

“In particular, the CMA takes a very dim view of a dominant company if it is seen to use its position to eliminate competition or leverage its position in a related or neighbouring market.

The clearest signs of such abuse are typically:

Predatory pricing – where a company charges less than the market rate in order to keep out competitors.

Cross-subsidisation – where a company charges higher prices to one group of consumers to subsidise lower prices for another group.

Price inflation – where a company uses its control of a market to increase prices beyond what is reasonably justified.

Nominet appears guilty of all three.””

It’s an extensive story which brings up some extremely troubling points for Nominet and it’s UK customers.

You can and should read the entire story here