EURid, the authority operating the .eu top level domain, has suspended 74,000 .eu domain names and sued 400 domain registrars for breach of contract.

The move was prompted by a syndicate of registrars which has allegedly acquired domain names with the intent of selling them on. In the domain name business this practice is called 'warehousing' and is not permitted.

"In this case we are convinced that the domain name holders of the 74,000 .eu names (Ovidio Ltd, Fausto Ltd and Gabino Ltd) are acting as a front for a number of registrars. The domain name holders and the registrars can be regarded as one and the same," said Herman Sobrie, legal manager at EURid.

"Since registrars should only register domain names for existing customers and not 'warehouse' the names in order to resell them at a higher price, this is clearly in breach of the registrar contract."

EURid claims that, when the system is abused, there is a risk that the perceived value of .eu will decrease, not only for the almost two million legitimate holders of .eu domain names, but for all fair registrars.

EURid added that it constantly monitors the registrations of .eu domain names in order to make sure that all holders are based in the EU zone.

A handful of .eu domain names have already been suspended as their holders have not been able to show that they are based within the EU.