To The Editor:
I read with interest your March 25, page 37 article, “Who’s minding the store? Dealers Balk As 1stdibs Seeks To Control Sales,” concerning the pending new policies of 1stdibs, the e-commerce giant.
As a corporate attorney, the new policies and controls are fascinating to me. Some issues that come to mind are listed below, and it will be interesting to see how these issues and others may eventually play out in the courts.
1. Antitrust law. Claims from end-buyers against 1stdibs and the dealers for resale price maintenance and price fixing, since (as you reported) dealers are apparently not allowed to charge their own prices for their goods, independent from 1stdibs.
2. Franchise law. The article’s reported amount of control and monitoring of dealers’ business that 1stdibs is imposing seems extraordinary to me, to the extent one might consider that state franchise and distribution laws could apply to the relationship between 1stdibs and its dealers.
3. Privacy law. Privacy and phone monitoring laws in certain states and the European Union might apply depending on where the dealer is located. The EU in particular has very strict rules on handling customer data and transferring it to the United States.
4. Banking law. Will any claims, pledges or restrictions of 1stdibs against dealer inventory which are agreed to by the dealers inadvertently place such dealers in breach of any bank loan covenants, inventory financing agreements or security agreements they may have signed?
5. Partnership law. Your article quotes 1stdibs reportedly saying in the FAQ that it has created a “partnership” with the dealers. This could be really interesting. To the extent that 1stdibs and the dealer’s business are so intertwined, one wonders whether a legal partnership of sorts is in fact being created, with a tangle of accounting and tax issues. The courts have test for examining this. In any event, it would come as no surprise for the participating dealers to consider forming a dealer council, to give them a voice in the partnership which 1stdibs says it has created.
My guess is that at some point, an enterprising alternative website will crop up and compete without the policies reported on in your article.
“Stay tuned” is my best (and only) advice!
David Freilich, Esq
