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The decision effectively means an end to Sotheby’s relationship with the Dealer and Auction Associates who have provided the majority of antiques, art and collectables for sale on the site since its launch in 1999.

Sotheby’s – who struck up a relationship with online giant eBay last year – will now focus their online activities on live auction business, promoting their bricks and mortar sales through eBay’s Live Auctions technology.

Offering buyers the opportunity to compete for merchandise guaranteed as authentic by the vendors, the Dealer Associates programme was to be the bedrock for Sothebys.com when the site was launched four years ago with initial set-up costs of £25m. By the time eBay came on board there were 1500 recognised dealers signed up to the site, but ultimately sales were disappointing. The Auction Associates programme fared better – with individual highlights such as the Frederick Leighton portrait discovered in Indiana and sold for $500,000 on behalf of Virginia auctioneer Ken Farmer – but the site has continued to haemorrhage money at a time when Sotheby’s are looking to cut costs.

“As our online auctions offered by our Dealer Associates and Sotheby’s have not generated a profit for Sotheby’s, we are discontinuing separate online auctions,” said Bill Ruprecht, president and chief executive officer. “This action will regrettably lead to redundancies and a one-time restructuring charge in the first quarter of 2003 in the range of $2-3m, but we anticipate that taking this step will enhance our profitability in 2003.”