Thousands of website names ending in the .eu suffix have been suspended by the body that administers the domain.
The .eu domain name was launched in December 2005
Brussels-based EURid froze 74,000 domain names which it believes have been stockpiled by a syndicate of registrars who intend to sell them on.
The process, known as "warehousing", is not permitted by EURid which is suing 400 registrars for breach of contract.
The organisation believes the domains were acquired by three UK companies which acted as a front for the group.
EURid named the companies as Ovidio Ltd, Fausto Ltd and Gabino Ltd.
"In this case we are convinced that the domain name holders of the 74 000 .eu names 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 of 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."
The .eu domain was launched in December last year for Europeans. Initially only registered trademark holders, public bodies, and companies could apply for a .eu domain.
The court case will take place in Brussels in October
A second phase of registration began on 2 February, when companies with other rights such as unregistered trademarks, could apply.
More than 300,000 organisations used the so-called sunrise period to apply for a .eu domain.
A final round of registration began in April which allowed the public to acquire a domain.
The staggered registration aimed to prevent "cyber squatters" - people who buy up web addresses with the same name as groups or companies, and offer to sell them on at an inflated price.
The "warehousing" scheme was uncovered by EURid's monitoring system that seeks to ensure that all holders of .eu domain names are based in the EU zone, as required by .eu rules.
A small number of domain names have already been suspended because the holders were unable to prove that they were based in the European Union.
In addition, EURid received a number of emails from other registrars who suspected that "warehousing" was occurring.
A statement by EURid explained the decision to suspend the names and sue the registrars: "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 also for all fair registrars."
The organisation has not said which names have been suspended. However, a search on the EURid website showed that names such as www.congestioncharge.eu had been registered by Ovidio Ltd.
The EURid website said the status of the name is now "on hold".
EURid say the action does not affect any of the nearly two million legitimate .eu domain name holders.
The court case against the accused registrars will begin in October, in Brussels.