FRENCH auction houses have won their battle to conduct private treaty sales.
The change in the law that forbade them from doing so came in
July after vigorous lobbying from Christie's, Sotheby's and others
in the face of equally vigorous attempts to prevent a change by
those who stand to lose out the most as a result: dealers.
The changes come into force on September 1.
Cutting away the red tape of French auction law has been an
ongoing priority for the industry since the landmark changes of a
decade ago started the process of sweeping away 200 years of
stifling bureaucracy and tradition that many blamed for France's
decline on the global auctions stage compared to the US and UK.
French auctioneers made it clear that they had the lucrative
business of private treaty sales in their sights when they gathered
almost two years ago for their national association's annual
conference. They wanted to see the implementation of changes
proposed in the 2006 European Services Directive, which were
adopted by the French Senate in October 2009.
Some auctioneers have found a legal route around the ban in
recent years by setting up holding companies to conduct these sales
at arm's length, but this has not prevented an asset drain - with
the accompanying loss in tax revenues to the French government -
across the Channel to London, where no such niceties are
Private treaty sales are becoming an increasingly attractive
option for vendors of high-value goods because they tend to be
cheaper, simpler and less time consuming than auctions; sellers
often get their money more quickly and their works of art run less
risk of being blighted than if they are seen to fail in the glare
of the saleroom spotlight.
For auctioneers, private treaty sales create an almost endless
new stream of revenue potential at the top end at a time when
rising auction commission levels are seen as an increasing barrier
to business. Private treaty sales are also generally easier to
administer and tend to need less marketing and staff support,
allowing for a leaner, faster-moving and more versatile
Sotheby's and Christie's both started to push their achievements
in the private treaty sector to the fore some time ago when
presenting their results - a sure indication of where they see
future battle lines as being drawn. In February Christie's
announced £369.3m in private sales for 2010, split between private
treaty sales and business conducted by Haunch of Venison, their
dealer subsidiary. The company stated that this was a rise of 39%
on the previous year and accounted for just over ten per cent of
Christie's entire turnover.
Meanwhile Sotheby's 2010 annual report put private treaty sales
at the top of the agenda for investors, behind only technology,
reporting totals of £327.5m, a slight rise from the £313m taken in
2009, but again representing just over ten per cent of the
company's entire turnover.
Indeed, both firms continue to highlight their performance in
private treaty sales in their latest
sets of figures.
Further changes to the law in France now permit auctioneers to
complete after-sales beyond the previous two-week deadline and also
to offer guarantees, a highly significant marketing tool in recent
years, but a system that all but closed down when the market
crashed in late 2008, leaving Sotheby's and Christie's
significantly exposed in the short term.
Regulation has also been tightened, however, with real powers to
prosecute auction houses in the civil courts given to the Conseil
des Ventes, France's industry watchdog.
By Ivan Macquisten
Auctioneers latest figures show private sales on the rise