Craigslist officials were caught off guard when told in 2007 that their minority shareholder, eBay, was going to compete directly with them in the online classifieds business in the U.S., an attorney for Craigslist said Wednesday.

Ed Wes said he was equally troubled by eBay's defiance in the face of Craigslist's subsequent request that eBay divest or sell its 28 percent minority stake because Craigslist was no longer comfortable having the online auction giant as a shareholder.

Wes said eBay attorney Brian Levey warned him in a telephone call after Craigslist asked for divestiture that eBay CEO Meg Whitman's response might be to tell Craigslist to go "pound sand."

"It was as if he knew what the response would be even before Meg responded, even before she saw the e-mail," Wes said. "It was a stunning moment for me."

Wes was testifying in a lawsuit in which eBay is challenging antitakeover measures adopted by Craigslist founder Craig Newmark and CEO James Buckmaster in response to eBay's launch of its Kijiji classifieds site and refusal to sell or divest its shares.

Craigslist contends that eBay was out to control Craigslist despite assurances that it was satisfied with a minority stake, and that it reneged on promises that Craigslist would be eBay's exclusive vehicle in the online classifieds market in the U.S., and that eBay would help Craigslist expand internationally. Craigslist also claims that eBay misused confidential financial information provided by Craigslist to help develop Kijiji.