The European Commission announced last week that they intend to take action against Sotheby’s and Christie’s regarding a whole range of anti-competitive practices.
The Brussels announcement comes only a few months after the US justice department concluded its own five-year investigation into similar practices in America, which resulted in Sotheby’s pleading guilty to fixing vendor’s commissions with Christie’s, who escaped prosecution by supplying evidence which helped convict their rivals.
The allegations of the European Competition Commission are much the same as those of their colleagues in the US anti-trust bureau. (Indeed, the two departments co-operated closely in bringing charges against the auction houses.) The Commission says that Sotheby’s and Christie’s fixed commissions, advances and guarantees to vendors, as well as exchanging information on clients, between 1993 and 2000, in contravention of EU competition law.
“The information made available to the Commission indicates that the collusive behaviour found its origins at the most senior level: the then two chairmen – Alfred Taubman for Sotheby’s and Christie’s Anthony Tennant – first entered into secretive discussions in 1993...,” according to the Commission.
The ‘objections’ are contained in a 50-page document handed to Sotheby’s and Christie’s last Friday, and the two auction houses have six weeks in which to answer them. The commission have set no time-table for the resolution of the case, but officals privately expect a judgement by the end of the year. There are important distinctions to be made between US and EU anti-trust law.
Because it is a civil, rather than a criminal offence to form an illegal cartel under European law, guilty parties are fined, rather than imprisoned. If convicted, Sotheby’s and Christie’s can expect a maximum penalty of 10 per cent of their annual turnover for the year prior to judgement. Unlike in the US, where Christie’s received immunity from prosecution and Sotheby’s bore the full brunt of federal investigation, under EU law there is no limit on the number of accused parties who can apply for immunity from prosecution.
However, there have only been a couple of cases where the commission have granted full immunity to companies being investigated since the leniency clause was introduced in 1996.
“The Commission has been made aware that no current employee of Sotheby’s was involved in the anti-trust collusion”, said a spokeswoman for the auction house. Christie’s declined to comment.