Dear ALAC, *The suggested changes is in BLUE.** * *Suggested Changes to the Draft Statement* In considering the matter of closed generic Top Level Domains (gTLDs), ICANN is guided by The Affirmation of Commitments (AoC) between the United States Department of Commerce (DOC) and ICANN clearly specify the promotion of competition, consumer trust and consumer choice.[1]<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftn1>It is also worth noting that there are several issues that surface with closed gTLDs and these include but are not limited to the following: 1. Would the endorsement of “Closed Generic” Applications create a situation or a series of situations whether now or in the future that will restrict competition? 2. Would the endorsement of “Closed Generic” Applications create a situation where there is a dominant position within the market? 3. Would the endorsement of the “Closed Generic” Applications create a restraint in trade of a particular market? 4. Would ICANN be immune from anti-trust liability? On 4th August 2012, a precedent was established in the *Manwin Licensing International S.A.R.L., et al. v. ICM Registry, LLC, et al *where the* *Honorable Philip S. Gutierrez, United States District Judge ruled that antitrust claims could be filed over .xxx. Under the *Sherman Act § 2, 15 U.S.C. § 2* *[2]*<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftn2>monopolizing trade is a felony. Under the circumstances where this trade involves foreign nations such as generic TLD applications that have been made by countries outside the US, then *Sherman Act § 7 (Foreign Trade Antitrust Improvements Act of 1982), 15 U.S.C. § 6a* will apply in relation to conduct involving trade or commerce with foreign nations. On the whole, the ALAC does not believe that unrestricted closed generics provide public benefit and would prefer that TLDs -- especially for strings representing categories -- were not allocated in a way that would lock out broad access to sub-domains. Some members of At-Large believe, on principle, that all closed generics are harmful to the public good. Others believe that, while not necessarily being beneficial to end users, closed gTLDs should be allowed as simply being consistent with existing practise for lower-level domains. Traditionally, the prohibition and control provisions laid out in competition rules basically aims to prevent cartelization and monopolization in markets for goods and services. Such developments in markets inevitably harm consumer welfare which competition rules aim to protect. On the same token, there are instances where some agreement may limit competition to allow for social and economic benefits to pass to the other. In order to ensure that such agreements with a net effect of increasing competition can be made, an exemption regime is regulated in competition law and agreements between undertakings in the same level (horizontal) and different levels (vertical) of the market may be left exempt from the prohibition of the competition rules under an exemption system, provided they are not cartel agreements which are, by nature, out of the scope of exemption. However, in developing this response to the Board's request, the ALAC found the issue to be far more nuanced than the above hard positions would suggest. There may be innovative business models that might allow a closed TLD to be in the public interest. An example might be a registry that makes 2nd level names available at no cost to anyone, but retains legal control over them. This is similar to the model used by Facebook and many blog hosting sites. Allowance should be made for applicants interested in widespread sub-domain distribution that do not require domain-name sales as a source of revenue, or for other forms of sub-domain allocation. Whether a generic-word string is used with its generic meaning or in some other context may also be relevant. The fictitious but famous computer manufacturer, Orange Computers Inc. using the TLD ".orange" might be acceptable, while the same string used as a closed TLD by a California Orange Growers Cooperative (and not allowing access to orange producers from Florida or Mediterranean and South American countries) might well be considered unacceptable. Allowing this nuanced approach would likely involve a case by case review of how a TLD will be used and how its sub-domains will be allocated. Moreover, it would require a contractual commitment to not change that model once the TLD is delegated. In summary, the ALAC believes that completely uncontrolled use of generic words as TLDs is not something that ICANN should be supporting. However, some instances of generic word TLDs could be both reasonable and have very strong benefits of just the sort that ICANN was seeking when the TLD space was opened. Such uses should not be excluded *a*s long as it can be established that they serve the public interest. ------------------------------ [1]<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftnref1>Clauses 3 and 9.3 of the Affirmation of Commitment between the United States Department of Commerce and the Internet Corporation for Assigned Names and Numbers Kind Regards, Sala