RU-CENTER Wins Appeal Over $7.5m Fine Following .РФ Auction Dispute

The Russian registrar RU-CENTER won an appeal Monday against a fine of about $7.5 million imposed by the Russian Federal Antimonopoly Service (FAS) for holding auctions at the beginning of General Availability in the Cyrillic TLD .РФ (.RF) in the Moscow Arbitration Court.

The court case came about because, according to the registry, tens of thousands of domain names were registered by the biggest registrar in .РФ, RU-CENTER, allegedly with the aim of auctioning them off at higher prices among its clients at a later date.

The scandal was always denied by RU-CENTER, who says they have acted within global best practice by auctioning off the domain names in demand.

The auctions came about following the RU-CENTER rules where there was more than one request for a domain name, an auction would take place with the domain name going to the highest bidder. This is what was to happen with around 24,700 domain names that were registered through RU-CENTER.

The RU-CENTER argued in the appeal that:

1. FAS incorrectly estimated domain name market, without taking into account international standards, foreign domain name space and experience in TLD management.

2. There was no illegal cooperation among registrars on the start of .RF open registration. RU-CENTER processed a part of its clients” applications on .RF names through other registrars. But all these registrars processed applications of their registrants first and then subsequently processed RU-CENTER applications.

3. RU-CENTER registered some domains itself via other registrars in order to process all applications of its existing clients. RU-CENTER received more than 120,000 pre-orders on .RF names at the time General Availability went live. the registry introduced a restriction preventing any registrar from processing not more than 4800 applications per hour.

RU-CENTER registered domains for its clients through other registrars itself and then did not transfer them to registrants because it was prohibited by the registry during the first year of .РФ General availability. All clients registered such domains received official registrant status and were able to use and administer them. After the restrictions on domain name transfer are cancelled (it will happen on 11 November 2011) RU-CENTER will automatically make the necessary registrant changes.

4. .RF auctions held by RU-CENTER are not illegal because domains were auctioned only where there were several pre-orders for the same domain. The price for auctioned domains was defined by registrants competing for them.