COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Regulation of the European Parliament and Council on the implementation of the .eu Top Level Domain

1. BACKGROUND

In December 2000, the Commission submitted the proposal for a European Parliament and Council regulation on the implementation of the Internet Top Level Domain ".EU" COM(2000) 827 final - 2000/0328/COD for adoption by the co-decision procedure laid down in Article 251 of the treaty establishing the European Community [1].

[1] OJ C 96 , 27.3.2001, p. 333.

The Economic and Social Committee delivered its opinion on 28 March 2001 [2].

[2] OJ C 155, 29.5.2001, p. 10.

On 4 July 2001, the European parliament adopted a series of amendments at its first reading [3].

[3] OJ ...

On 2 October 2001, the Commission presented an amended proposal, pursuant to Article 250(2) of the CE Treaty. [4]

[4] OJ C ... [COM(2001) 535].

On 6.11.2001, the Council adopted a common position.

This Communication sets out the Commission's opinion, pursuant to the second subparagraph of Article 251(2) of the EC Treaty, on the common position adopted by the Council.

2. OBJECTIVE OF THE COMMISSION PROPOSAL

The regulation implementing a .eu Top Level Domain (TLD) aims to provide undertakings, organisations and individuals in Europe with a new domain for registration of names and to promote easier access to Internet networks. The regulation sets out the conditions for the implementation of such a Top Level Domain and determines the characteristics to be met and the obligations to be observed by the Registry which will be designated to organize, administer and manage the .eu TLD. The regulation also establishes the general policy framework.

3. COMMENTS ON THE COMMON POSITION

The Council common position includes a number of proposed changes to the Commission's original proposal. The Commission can accept all of these proposed amendments, with the exception of the Council's position on article 6.

The Commission can accept all of the Council's proposed amendments to the recitals as being useful clarifications of, or additions to, the Commission's proposal, with specific comments in the following cases.

Recital 4: The Council have proposed that the first sentence should read "The .eu TLD should promote the use of and access to Internet networks and the virtual marketplace....( remainder of text to read the same as the Commission proposal, additional text underlined). This modification to the original text which referred to the fact that "The .eu TLD should promote easier access to...." can be accepted.

Recital 7 (new): This amendment seeks to highlight the importance of the .eu TLD for neighbouring countries. It also states the expectation to extend the provisions of the regulation to the European Economic Area and the possible amendment of existing arrangements with European third countries to facilitate their participation as well. The Commission agrees with the need to consider the wider participation of European Economic Area and European third countries in the .eu TLD in the future, although the Regulation will, in the first instance, only apply to EU Member States.

Recital 8 (new): This amendment introduces an explicit reference to the fact that the regulation is without prejudice to Community law in the field of personal data protection and is made in compliance with principles relating to privacy and the protection of personal data. The European Parliament has proposed a similar amendment (5). The Commission can accept this addition as a clarification of the text though no doubts can be raised that the Community legislation on personal data protection applies.

Recital 9 (new): This recital refers to the need for the .eu Registry to respect principles of Internet management, namely non-interference, self-management and self-regulation. The recital also refers to the need for the Registry to take account of best practices, and for implementation to be supported by voluntary codes of conduct where appropriate. The European Parliament has made similar proposals for amending the text, with the additional provision that codes of conduct should be mandatory. The Commission shares the objectives concerned, with the reservation that the principles mentioned would only apply to management issues not addressed by the Regulation. The Commission also agrees with the Council that codes of conduct should be utilised where appropriate, and on a voluntary basis rather than mandatory.

Recital 10 (new): this recital specifies that the establishment of the .eu TLD will strengthen the EU image on global information networks, and provide added value in respect of existing country code TLDs, and is identical to an amendment proposed by the European Parliament. The Commission agrees with these objectives and can agree to the amendment.

Recital 11: this recital would add a reference to recital 9 of the Commission's proposal to the fact that national TLDs are not covered by the Regulation. (This new recital would also reflect the new text proposed by the Council for article 1). The Commission agrees that the .eu Regulation will not apply to national country-code TLDs, and can accept the proposed amendment as a useful clarification.

Recital 12 (new): this recital refers to the functions of the Registry, the importance of "Whois"-type databases to boost user confidence and the need for such Whois-databases to conform to Community legislation on data protection and privacy. The text relates to the Council's proposed parallel amendment to article 2.a to include a reference to maintenance of "associated public query services" and operation of the Registry of domain names in the tasks of the Registry. The Commission can agree to this proposal.

Recital 13 (new): this recital refers to the procedure the Commission should follow for designation of the Registry, including the publication of a call for expressions of interest in the Official Journal. This recital relates to the Council's parallel proposal for amendment of article 3. The Commission agrees that the procedure for inviting expressions of interest needs to be transparent, open and non-discriminatory and that a publication of a call in the Official Journal is an appropriate way to achieve this. The Council text for the recital also refers to the nature of the contract that should be signed by the Registry with the Commission, as stipulated in article 3.1 of the Commission's proposal, and the Commission agrees that a parallel reference in the recitals is a useful additional clarification.

Recital 15 (new): this recital introduces a reference to the present role of the Internet Corporation for Assigned Names and Numbers (ICANN) in the delegation of codes representing TLDs instead of such reference being made in the Article itself. It also introduces a reference to the Council resolution of 3 October 2000 encouraging the implementation of the principles of the Governmental Advisory Committee (GAC), which were referred to in recital 7 of the Commission's proposal.

The European Parliament has introduced a similar proposed amendment referring to ICANN which includes the phrase "without prejudice to what may happen in the future". The Commission agrees with the Council that this additional text is unnecessary and may give the inappropriate impression that the EU has doubts as to ICANN's future role. At the same time, the Commission agrees that it is appropriate to take account in the recitals of the fact that future responsibility for co-ordinating the delegation of codes representing ccTLDs could, in principle, be transferred to another body. For this reason, the Commission also agrees that it is appropriate to refer in article 3 for the need for the Registry to "enter into the appropriate contract providing for the delegation of the .eu ccTLD code" as proposed by the Council, rather than the original Commission proposal which referred specifically to a contract with ICANN.

Recital 16 (new): this recital refers to the inclusion in public policy of provisions to allow holders of prior rights and public bodies to take advantage of a "sunrise" period for registrations, and is related to the Council's proposed parallel new text for article 5 (see below). The European Parliament has made similar amendments related to Article 4 "Obligations of the Registry" providing that the Registry may implement the registration of names "in stages" to ensure that the holders of prior rights recognised in law and public policy have sufficient time to register their names. The Commission agrees that the Council's proposal is a useful approach to minimise subsequent disputes and the possibility of speculative and abusive registrations and that registration in a phased manner can constitute an important means to the end that the holder of a prior right, recognised or established by national and/or Community law, in accordance with the public policy rules adopted according to article 5, paragraph 1 will obtain registration in the first place.

Recital 17 (new): this recital refers to the need to ensure names are revoked in a timely and efficient but not an arbitrary manner, and that revocation can be obtained should a domain name be manifestly contrary to public order. The Council has also proposed that article 5 include a requirement for the Commission to adopt public policy provisions relating, inter alia, to the possible revocation of domain names. The Commission agrees that a recital along these lines is a useful clarification of the process to be followed by the Registry for the revocation of names. The Commission also views these proposals as being consistent with article 4.2 provisions of its proposal concerning the need to prevent speculative and abusive registrations.

In addition to the revocation of domain names policy, the Council addresses the need raised by the Parliament to adopt a policy on the question of bona vacantia in relation with domain names which are not renewed or which are left without holder, by effect of succession law.

Recital 19(new): this recital proposes that the Registry should not be empowered to create second-level domains using alpha-2 codes representing countries. The European Parliament has introduced a similar amendment to the recitals related to sub-domain registrations using Member State identities. The restriction to use such codes should however be limited to second-level domains .The Commission agrees that such domains would be inappropriate and agrees with the Council's proposal.

Recital 20 (new): this recital seeks to clarify the meaning of "interested parties" in article 5.3, by proposing that consultation with such parties should include public authorities, undertakings, organisations and natural persons. In reflecting on the Parliament's proposal for a Public Advisory Body to advise on registration of second-level domains, the Council's proposal refers in this recital to the possibility for the Registry to set up an advisory body to organise such consultation. The Commission can agree to this proposal, with the proviso that any advisory body should not be an exclusive mechanism for consultation and that all interested parties, whether members of such a body or not, are free to participate in any consultation. Such an advisory body should be established by the Registry itself.

Article 1 - Objective and scope of the regulation

Article 1.1

The Commission can agree to the precision specifying that the .eu Top Level Domain is a country code Top Level Domain, though the code EU corresponding to the European Union cannot be qualified strictly as a country code.

Article 1.2

The Council has proposed an expansion of this article to include a reference to the fact that the regulation will apply without prejudice to arrangements in Member States regarding national Top Level Domains (ccTLDs). A similar amendment is proposed by the Parliament with reference to country code Top Level Domains. The Commission agrees that the regulation for the implementation of the .eu TLD is not intended to apply to the existing ccTLDs in the Member States, and can accept this amendment as a useful clarification.

In this article the Council proposal for a reference to the general policy framework can replace the initial qualification of public policy framework as the regulation is not remaining strictly limited to public policy. This proposal has also been made by the European Parliament.

Article 2 - Definitions

Article 2.a and b

The Council has proposed that the original Commission text be expanded to provide additional references to the functions of the Registry and to include a definition of a "Registrar". These additional references are useful clarifications and complement the proposal adequately. The definition of a Registrar is necessary considering the additional provisions included in the Regulation in Article 3.4 and 4.2.e. These amendments correspond to similar amendments proposed by the Parliament.

Article 3 - Characteristics of the Registry

Article 3.1

The procedure to be followed for the designation of the Registry by the Commission has been further elaborated in the Council proposal and involves additional requirements. In particular the establishment of the criteria and procedure for the designation of the Registry are made subject to the consultation of the Committee to be established according to Decision 1999/468/EC and equally so the designation of the Registry, after the publication of a call for expressions of interest in the Official Journal, and the contract with the Registry. The Commission is fully committed to the need for transparency of the procedure and can therefore accept the amendments. The proposal of the Parliament to include a reference to a call for expression of interest is met by this revision of Article 3.1. However, the Commission calls attention to the risk of introducing cumbersome procedures and on its reserve in relation with the type of Committee.

In addition, the Council has proposed a requirement that the Registry may not accept registrations until a registration policy has been adopted. This may be considered as an additional clarification, but could also be partly duplicating Article 5.2.

The Council proposes that the explicit reference to the Registry entering into a contract with ICANN in the Commission's proposal be replaced by a reference to the Registry entering into "an appropriate contract providing for the delegation of the .eu ccTLD code". In parallel, a reference to ICANN's current role in this respect would be made in the recitals. Given the fact that the long term commitment of ICANN is depending on a contractual situation, the Commission agrees that the modification to Article 3.3 reflects more accurately the requirement to be met by the Registry and that the reference to ICANN is more appropriate to the recitals than to the main body of the legal text. This amendment concurs with a similar proposal of the Parliament.

Article 3.4

The Council's common position as well as the Parliament have also added a requirement for the .eu Registry not to act as a Registrar . The separation of the function of Registry and Registrar is supported by the Commission as a measure to avoid unfair competition. This modification meets a similar request made by the Parliament. An additional amendment of the Parliament to ensure full independence of the Registry from the Registrars may go beyond the need to ensure separation of activities and be unnecessarily restrictive. The Commission supports therefore the modification of the Council.

Article 4 - Obligations of the Registry

The Council has proposed several amendments to the text proposed by the Commission, in order to clarify the obligations of the Registry under the Regulation. The common position also reflects similar amendments adopted by the Parliament.

Article 4.1

Both Council and Parliament (Amendment 19) additions to the proposal of the Commission for Article 4.1 are acceptable as they complete this paragraph with a reference to the contracts referred to in Article 3 which the Registry will have to comply with. The reference to transparent and non-discriminatory procedures was already included in the initial proposal though it now positioned differently in the text.

Article 4.2.a

The addition of the necessity for the Registry to organise, administer and manage the .eu in the general interest is a useful addition in line with the Governmental Advisory Committee (GAC) principles for delegation and administration of ccTLDs of 23 February 2000 and is acceptable to the Commission.

Article 4.2.b and 4.2.e

The proposal to delete the reference to the need for the Registry to "observe applicable public procurement rules", proposed by both the Council common position and the Parliament's amendment 22 is acceptable to the Commission given that such rules will undoubtedly apply under existing legislation should the conditions for their application be met by the Registry. Moreover, it is possible that the Registry will be a private, not-for-profit body, and that public procurement rules will not apply. Given such a possibility, the Commission agrees that it would be inappropriate to have an explicit provision to apply public procurement rules in the Regulation.

The initial proposal did not address the relationship between the Registry and the registrars as it was intended to leave these to be developed by the Registry. These aspects of the registration organisation are now brought into the regulation by the amendments of the Council (4.2.b and 4.2.e) and a similar amendment has been adopted by the Parliament (amendment 25). The registration of domain names through accredited registrars is a well established practice in Top Level Domain management and allows competition to take place amongst the registrars. The principles which have been added in the common position are acceptable to the Commission as they clarify the obligations of the Registry in relation to the registrars and the text proposed by the Council incorporates the amendment adopted by the Parliament.

Article 4.2.b.(ii) referring to organisations established within the Community is completed in the common position by adding "without prejudice to the application of national law". This addition to the proposal of the Commission answers a concern in some Member States about the possible application of a national law to specific organisations in relation to the registration of their names. The Commission can accept such an addition in so far as no conditions with regard to a priori controls would be imposed on the Registry by such a requirement and in so far as national rules in one Member State regarding organisations do not affect or intend to affect the right of an organisation of another Member State to register a domain name under the .eu TLD, bearing in mind that any relevant public policy rule concerning the implementation of the .eu TLD is addressed according to Article 5.1

Article 4.2.d

The Council has also proposed that Article 4 should include a requirement for the Registry to implement the extra-judicial settlement of conflicts policy and a procedure to promptly resolve disputes between domain name holders, and that the policy is adopted pursuant to Article 5.1. The implementation of this policy as an obligation of the Registry under Article 4 concurs with amendment 29 of the Parliament. The Commission favours the reference to the "implementation" of the policy in the common position which allows the Registry to assess how to best perform such implementation. Part of the text which was transferred from the initial Article 4 to Article 4.2.d relates to the policy itself ("take into consideration the recommendations of ...court proceeding") and could be repositioned into Article 5.1.a.

Amendment 29 of the Parliament adds that the extra-judicial settlement of conflict should be provided free of charge or on no more than a cost-recovery basis. A similar requirement is included in Amendment 35 of the Parliament. While the Commission can support this principle proposed by the Parliament although favouring the cost-recovery option, the common position includes no such provision. The principle that such extra-judicial settlement of conflict be available on a cost-recovery basis is consistent with a similar principle applying to fees as provided in Article 4.2.c.

Article 4.2.f

The Council proposal also includes a provision requiring the Registry to "ensure the integrity of the database" which integrates amendment 26 of the Parliament. This task is part of the normal function of a TLD Registry and the Commission can accept the amendment. It could however be repositioned as a function of the Registry in the definition in Article 2.a and it would also be clearer to stipulate a reference to the 'domain names' database

Article 5 - Policy framework

The modifications to Article 5 are substantial. While the general balance of power envisaged in the proposal of the Commission is not fundamentally affected by the Council's proposals, (namely, that the public policy rules remain the responsibility of the Commission whereas other implementation measures are left to the Registry), important limitations have been introduced in the common position to the registration policy initially reserved to the Registry. The Commission can accept the amendments made to its proposal by the Council which incorporate a number of the Parliament's amendments but it underscores the extended role being reserved to the Commission, in accordance with the comitology procedure, as a consequence and the potential risk of introducing cumbersome procedures in such a dynamic and fast changing environment. Hence the Commission stresses the need to limit its involvement to matters strictly relating to public policies in full respect of the principles of proportionality and subsidiarity.

Article 5.1

Public policy matters are more precisely identified in the revised Article 5.1 and include the initial two key public policy issues mentioned in the Commission's proposal. Namely, the policy on speculative and abusive registration of domain names and the policy on extra-judicial settlement of conflicts. Additional issues highlighted in the Council proposal are the policy relating to the revocation of domain names, issues of language and geographical concepts and intellectual property rights and other rights. In addition, the public policy principles on registration have been added which the Registry will have to implement in the registration policy.

The Parliament may want to assess the extent to which the redrafting of Article 5.1 in the common position addresses adopted amendments relating to public policy issues. In view of the Parliament's Amendment 38 the question of names which are not renewed or left without a holder, by effect of succession law (bona vacantia), is added to the public policy issues to be addressed together with the revocation of domain names. The revocation of domain names itself is part of the issue raised in Amendment 34 of the Parliament. The extent to which holders of prior rights recognised by national and/or Community law and public bodies are offered a possibility of a temporary registration period is to be determined as part of the policy on speculative and abusive registration of domain names; this modification of the Commission's proposal is addressing in part the questions raised in Amendment 32 while some of the additional questions raised in this amendment could be left for decision as part of the public policy principles on registration and according to Article 5.1. procedure

Article 5.2

While the Commission rejected amendments 37 and 6 of the Parliament, it recognised the importance of the concerns raised by the Member States in relation to geographical and geo-political names affecting the territorial organisation of a Member State. For this reason, it supports the Council's proposal for Article 5.2 as an appropriate safeguard in that it offers the Member States an option to address the issues related to such names while providing for a more transparent procedure. The Parliament may also find it appropriate to address this question as outlined in the common position.

Article 5.3

The Commission's initial proposal for Article 3.3 has been modified in the light of the modifications introduced in Article 5.1 and 5.2. Article 5.3. of the common position is acceptable to the Commission. However the Commission underlines in the context of Article 5.3 the need to clarify that the Registry, while adopting registration policy, will not adopt itself public policy rules. This requirement will be addressed by the Commission in the contract with the Registry.

While the Parliament is referring to the registration of domain names on a first-come first-served basis in Amendments 23 and 32, the common position does not mention such a principle which is however the underlying principle of a registration policy. The Commission could agree with a reference to such a principle in addition to Article 5.3. as redrafted in the common position.

Article 5.4

The Commission can accept this modification to its proposal.

Article 6 - Committee

The Council has proposed that the Commission be assisted by a specific regulatory committee. The Commission rejects this proposal and maintains its view, in the light of its comments on Article 5, that it would be more appropriate for the Commission to be advised by the advisory committee to be established by the Directive on a common regulatory framework for electronic communications networks and services [5], and until entry into force of this Directive, to be assisted by the committee established under Article 9 of Council Directive 90/387/EEC of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision.

[5] Proposal for a Directive on a common regulatory framework for electronic communications networks and services - COM(2000) 393.

The Commission feels that the convergence of information and communication technologies is such that Internet management issues such as those covered by this Regulation should be overseen in close conjunction with other issues related to electronic communication networks. The Commission also feels that a requirement for the Commission to be advised by a regulatory committee would represent an unnecessarily heavy burden on the ability of the Commission, in consultation with the Registry, to implement a .eu TLD effectively and efficiently.

The Parliament's Amendment 39 is supported by the Commission and subject to this amendment the Commission maintains its initial proposal, therefore rejecting Article 6 as outlined in the common position.

Article 8 - Implementation Report (new)

The Council has proposed that the Commission should submit a report on the implementation, effectiveness and functioning of the .eu TLD one year after adoption of the regulation and thereafter every two years. This reflects an identical proposal of the Parliament. The Commission feels such reporting would provide a useful opportunity to review progress of the .eu TLD and considers this proposal to be a useful addition to the provisions of the Regulation.

4. CONCLUSION

The Commission can accept all the proposals included in the Council's common position with the exception of the reference to a specific regulatory committee in Article 6.