Gold's merger a tarnished flop

Dutchbid and Gold's Auction decide to pull the plug on a planned merger, with each company claiming the other has fallen short of contractual promises.

2 min read
Two online auction sites have decided to pull the plug on a planned merger, with each company claiming the other has fallen short of contractual promises.

Biloxi, Miss.-Dutchbid has decided to back away from a deal to buy Gold's Auction, alleging that Gold's has breached a merger contract. Gold's, in turn, has decided to also walk away, alleging that Dutchbid also failed to live up to promises made during negotiations, and is exploring other options for its now defunct site.

"Many weeks of frustration have gone by since this agreement was made," Dutchbid President Eric Rosenberg said in a note to Dutchbid members earlier this week.

Gold's spokesman Ed Lechner has countered that the deal signed between the companies two months ago was merely an agreement to make further plans. Many details were not spelled out, he added. For example, Lechner said plans for the transfer of the Gold's customer base to Dutchbid were left vague and were supposed to be worked out after the two companies signed the initial contract.

Those details were never worked out, Lechner said.

"There were five things (Rosenberg) was supposed to do once the contract was signed," Lechner said. "None of those things were done."

The status of Gold's member database, which contained some 26,000 registered customers, was the biggest point of contention. In his note to Dutchbid members, Rosenberg accused Gold's of "marketing and selling" its member database to third-party companies, a claim Lechner denies.

Lechner said Gold's hesitated to hand over the data to Dutchbid because it wanted to make sure the handover would comply with Federal Trade Commission regulations.

Privacy advocates have raised questions about the legality of transferring customer information from one site to another. Many Web sites promised in their privacy policies to never share their customers' information with third parties. But with many dot-coms in trouble, some have come to view their databases as valuable property that could stave off creditors.

Disney-aligned Toysmart, for instance, attempted to sell its customer list after closing shop earlier this year. Last month, a federal judge approved a plan for Disney to buy the list from Toysmart and destroy it.

In the wake of repeated outages at eBay, many eBay sellers flocked to Gold's Auction in 1999. But the site, which offered free listings, was immediately overwhelmed by the traffic and never came close to matching eBay's listings or members.

In December, Gold's Internet service provider pulled the plug on its Web site because of outstanding debt. One week later, Dutchbid agreed to buy Gold's and began displaying Gold's logo on its site and courting its members.

Dutchbid, which debuted in December, made a name for itself hosting a controversial auction by hacker Kevin Mitnick.