Documents considered by the Committee on 12 September 2018 Contents

29The “.eu” internet Top-Level Domain

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; updates requested

Document details

Proposal for a Regulation of the European

Parliament and of the Council on the

implementation and functioning of the .eu Top

Level Domain name and repealing

Regulation (EC) No 733/2002 and Commission

Regulation (EC) No 874/2004

Legal base

Article 172 TFEU (trans-European networks);

ordinary legislative procedure; QMV

Department

Cabinet Office and Culture, Media and Sport

Document Number

(39664), 8468/18 + ADDs 1–6, COM(18) 231

Summary and Committee’s conclusions

29.1The .eu Top Level Domain (TLD) was launched in December 2005. The .eu TLD allows businesses to promote their European status, and also assures citizens that they are dealing with businesses which have a commercial presence within the EU.

29.2The Committee has been scrutinising the implications of EU exit for UK-based stakeholders who currently hold or may wish to acquire .eu domain names, in relation to a report on the functioning of the .eu Top-Level Domain324 and a subsequent proposal to modernise the rules governing the functioning of the Top-Level Domain.325

29.3In its first report on this issue, on 11 July 2018,326 the Committee noted that the EU legal act governing the management of the .eu Top-Level Domain327 only permits persons, organisations and businesses based in the European Economic Area to register .eu domain names, and that, in consequence, when the UK leaves the European Union and any transition period ends, UK persons and organisations that have registered .eu domain names will no longer be legally eligible for these registrations. 317,000 UK-based registrations for .eu domain names potentially stand to be affected by these developments.

29.4In a response to the Committee’s report,328 the Minister of State at the Department for Digital, Culture, Media and Sport (Margot James) noted that UK multinationals with multiple offices across the European Economic Area (EEA) would be able to retain their use of the .eu domain name (by transferring the registration to an EU-based branch), but “for solely UK-based businesses, small or otherwise, and UK-based citizens, it is possible that they may not be able to retain the use of a .eu domain in the absence of a post-exit agreement on this issue.”

29.5In a subsequent report on 11 July 2018,329 the Committee took note of the Commission’s proposal to replace the existing regulatory framework for the .eu Top-Level Domain with a simplified, principles-based regulatory framework for the domain’s management. In the Government’s Explanatory Memorandum, the Minister indicated that the proposal would remove outdated legal and administrative requirements identified by the impact assessment, increase and enhance the role of stakeholders in the governance and administration of the .eu Registry, and generally enhance the performance of the .eu TLD in the expanding domain names market. The Committee noted that the Government did not have any concerns about the proposal.

29.6Nonetheless, the Committee sought further information from the Government regarding the EU exit implications, asking the Government to provide it with:

29.7On 25 July 2018 the Minister responded to the Committee.330 The detail of her response is included in our conclusions (below).

29.8We have taken note of the Minister’s letter of 25 July 2018. We welcome her update that “experts in the domain names industry including at ICANN (Internet Corporation for Assigned Names and Numbers), which manages the global domain name system, have been consulted on the operational aspects of revoking over 300,000 registrations (9% of the total) from the .eu registry operated and managed by EURid”.

29.9We have also taken note of her assurance that the Government has contacted the Confederation of British Industry, the Federation of Small Businesses and the British Retail Consortium so that these organisations can consult their stakeholders and feed back to the Government on the impact of the loss of eligibility of UK-based registrants for .eu domains. The Minister also states that, to date, DCMS has not received any representations from UK registrants of .eu domains.

29.10In response to the Committee’s question as to whether Estonian e-Residency provides a means for UK stakeholders to maintain their eligibility for registration, the Minister does not give a clear view, stating that this is “a matter for individual applicants and existing registrants to consider, and for the Registry to determine … in consultation with the European Commission” and noting that “the current practice of accredited registrars who sell .eu domains is to check if the address provided by the person or entity applying is in a valid country within the EU or EEA.” Our assessment is that, as neither the current nor the draft eligibility criteria specify the need for EU-established undertakings to have a physical presence in the Union, and Estonia in any case requires businesses registering in it to provide an address and contact (although not to have an actual office) in Estonia, establishing a company in the EU through e-Residency is likely to provide one possible solution for UK businesses who wish to retain their .eu domain. However, we note that doing so entails a range of costs, that e-Residency is designed for private limited companies rather than sole traders,331 and that the ongoing viability of this solution would depend on the interpretation, application and development of EU rules governing the registry. We also note that, although e-Residency is potentially attractive because it is not based on geographic location, forming a secondary establishment in another European Economic Area state would have the same effect in terms of entitling UK businesses to retain/apply for .eu domains.

29.11Although the Minister does not directly answer the Committee’s question as to whether the Government intends to seek the inclusion of provisions on the .eu domain name within the scope of the future economic partnership between the UK and the EU, we infer from the Minister’s statement that “the Government recognises that there are specific benefits that are associated with the Digital Single Market which the UK will no longer be part of once it has left the EU” and that “the UK and the EU will not have current levels of access to each other’s [digital] markets in the future” that the Government will not seek continued eligibility of UK stakeholders for .eu domains. Given that the UK will no longer be an EU member state, this seems logical, if potentially problematic for businesses which “have invested in long business plans based on .eu websites for their online presence and operations”.332

29.12In summary, we conclude that UK multinationals with a secondary establishment within the European Economic Area (EEA) will retain their eligibility to use .eu domain names (they will merely have to transfer the registration to an EU-based branch) when the effects of EU rules governing the .eu registry cease to apply to the UK; on the other hand, solely UK-based businesses will lose their current eligibility, and will have to establish a primary or secondary establishment within the European Economic Area in order to retain their access; and UK-based citizens will also lose their eligibility.

29.13In view of the Government’s lack of concern regarding the proposal itself, we now clear this draft regulation from scrutiny. We ask for a short combined update in due course on the outcome of the Government’s consultations with representative business organisations as well as ICANN’s advice on the operational aspects of the revocation of UK-based domains.

Full details of the documents

Proposal for a Regulation of the European Parliament and of the Council on the implementation and functioning of the .eu Top Level Domain name and repealing Regulation (EC) No 733/2002 and Commission Regulation (EC) No 874/2004: (39664), 8468/18 + ADDs 1–6, COM(18) 231.

Previous Committee Reports

Thirty-Fifth Report HC 301–x (2017–19), chapter 1 (11 July 2018); Tenth Report HC 301–x (2017–19), chapter 3 (17 January 2018).


324 Report from the Commission to the European Parliament and the Council on the implementation, functioning and effectiveness of the .eu Top-Level Domain (15472/17).

325 Proposal for a Regulation on the implementation and functioning of the .eu Top Level Domain name (8468/18).

326 Tenth Report HC 301–x (2017–19), chapter 3 (17 January 2018).

327 Regulation 733/2002 on the implementation of the .eu Top Level Domain.

328 Letter from the Minister, Department for Digital, Culture, Media and Sport (DCMS), to the Chairman of the European Scrutiny Committee (5 March 2018).

329 Thirty-Fifth Report HC 301–x (2017–19), chapter 1 (11 July 2018).

330 Letter from the Minister (DCMS) to the Chair of the European Scrutiny Committee (25 July 2018).

331 According to an article by an employee of the Estonian e-Residency programme, it costs €190 to register a company as e-resident in Estonia, and many e-resident businesses employ a “business services provider” to provide services such as providing an address and contact in Estonia. Becoming an e-resident sole trader is not encouraged as sole proprietorship comes with additional legal obligations which are “more suitable for residents of Estonia”: businesses interested in becoming e-Resident are therefore encouraged to establish a private limited company.

332 Explanatory Memorandum from the Department for Digital, Culture, Media and Sport (DCMS), to the Chairman of the European Scrutiny Committee (27 April 2018).




Published: 18 September 2018