AUCTIONEERS and trade associations sharing information on undesirable clients have to be careful that they are not breaking the law.
So says leading industry lawyer Pierre Valentin of Withers LLP,
who set out the potential pitfalls at the latest meeting of the
Society of Fine Art Auctioneers and Valuers (SOFAA).
Auctioneers risk falling foul of several legal requirements, he
told delegates, not least unintentionally creating a cartel.
"The issue is whether auctioneers may share amongst themselves
information on buyers who do not pay or pay late, or sellers who
consign dubious property, or agents who claim to represent others
without authority," said Mr Valentin.
"Competition law prohibits behaviour that has the object or
effect of preventing, restricting or distorting competition… The
first concern is that the sharing of information amongst
auctioneers may distort competition."
He further explained that if the information is shared within a
trade association that holds a dominant position in the UK auction
market, the trade association "may abuse its dominant
"Occasional information sharing is unlikely to be a concern
because the impact on competition will be negligible," Mr Valentin
explained. But he said that "the organised sharing of information
(e.g. within a trade association) potentially violates competition
What's more, the fact that there are good commercial reasons for
sharing the information (e.g. protecting auction businesses from
rogue clients) is not a good defence to anti-competitive
"Sharing statistical data and market research is acceptable.
Sharing generic information such as, for example, the fact that a
string of fake sculptures were recently consigned from a particular
region, is unlikely to be an issue. The more specific the
information (e.g. named individuals) the greater the risk of
violating competition laws."
Delegates were further advised that the sharing of specific
client information is not just a risk from a competition law
perspective. It could also violate clients' confidentiality.
There is also the risk that information being shared could be
"If auctioneers occasionally share information amongst
themselves on specific clients, statements on those clients should
be verifiable," said Mr Valentin. "If the client claimed
defamation, the auctioneer will normally have a defence if he can
justify his statement by reference to, for example the client's
Finally, if auctioneers share client information in writing,
there is the further risk that they will violate data protection
Mr Valentin's seminar will undoubtedly provide the industry with
food for thought. It follows on from his equally useful SOFAA
session last year, when delegates were astounded to discover that
they risked unwittingly breaking the law against bribery by not
following the correct administrative procedures.
To read ATG's report on that issue,
By Ivan Macquisten