German legal fight over Internet sales

The Economics Ministry has confirmed that virtual sales do not meet the necessary criteria under the law, says the society which is now seeking a court order to prevent Internet auction companies from referring to their sales as public auctions or sales.

What has upset the society is that while its members, who conduct live terrestrial auctions in traditional auction houses must apply for licences from their local authority to practise, the Internet auction firms are conducting business without doing so. The society’s president, Herr Tilman Bassenge, who is leading the legal challenge, explained that to qualify for a licence, auctioneers must satisfy the authorities that they are reliable in the conduct of their business, have a sound financial base and can display a suitable knowledge of German auction laws.

In addition, under German law, auctions must take place in a local place – where the local authority licence applies – at a given time. Delayed bid Internet auctions and continuous auctions, where the successful buyer of a lot is the one with the highest bid by the deadline, fulfil neither criteria under the law, argues Herr Bassenge.

“This is not fair competition for auctioneers and there is no legal protection for the consumer,” he told the Antiques Trade Gazette.

“We are not against technological development, in fact we support it, we just want to make sure that there is equality of competition under the law and that the customer is protected.”

He made it clear that he did not want to stop the Internet companies from holding auctions, he just wanted to make sure that they did not advertise them as such if they could not meet the legal requirements. Herr Georg Friedrich, of extralot.com, against whom the society has directed its efforts, believes that it is fear of Internet auction companies winning business off them that has prompted the traditional auction houses to act.

“They realise that they could have a big problem,” he told the Antiques Trade Gazette. “Our commission is only eight per cent when their’s is at least 15 per cent, we offer more information on lots through the website, and our catalogues are available all over the world through the Net, whereas their’s are not.” In addition, he said, consumers had protection through the full warranties they gave on their service.

He said that there was no legal bar on using the word auction but was not worried about any ruling. “We’ll just call our sales ‘Sale to the highest bidder’ or ‘Internet art service’ or something like that.”

Herr Friedrich believes that the society has no chance of success because the ruling would prove a bar to companies such as Sotheby’s and eBay, who are not licensed locally in Germany. Even if the society were successful, it is difficult to see how it could prevent Internet auctioneers from advertising public auctions in international media, such as satellite TV that could be received in Germany.