21. For years the .uk domain name industry has been self regulated without need for Government intervention and this has largely worked well. Nominet has ensured at the same time that all wider stakeholder interests are taken into account. There have however been reported abuses of the domain name system such as cyber-squatting, drop catching, pressure sales of domain names and poor registration practices. If the successful self-regulation were to fail through a failure to address the concerns identified in the Nominet governance review, then the Government would have to intervene in order to protect consumer interests and guarantee Internet users in the UK that the domain name system will remain coherent and continue to function in their interest.
22. In view of this, the Government has decided that on a precautionary basis it will seek reserve powers in any appropriate forthcoming legislation to regulate against the risk that the entry into the sector of a number of new, and as yet unidentified, players will mean we need a basis for industry cooperation. These powers may, for example, enable the Government to direct Ofcom to regulate the distribution of domain names in the UK, possibly by setting conditions and establishing a code of practice to which the industry would be required to conform.