In fact, the auction houses’ situation may be worse. With the right evidence, price-fixing cases are often open-and-shut. There’s no question Sotheby’s and Christie’s commissions have moved in tandem for decades. Before the early 1980s neither imposed fees on buyers: you paid what you bid. Then Christie’s began charging buyers a 10 percent “premium”; Sotheby’s followed two years later. In 1992, within six weeks of each other, both houses raised those buyers’ commissions again. In 1995 it was the sellers’ turn to pay more, as both houses adopted a sliding scale of commissions ranging from 20 percent for cheaper goods down to 2 percent on the priciest wares. Those price moves may appear suspicious, but there’s nothing criminal about competing firms naturally gravi-tating toward similar prices. It’s only when investigators can find proof–letters, meeting notes–that indictments and fines often follow. With Christie’s cooperating, they should find any smoking guns that exist. Neither company will comment.
The scandal couldn’t come at a worse time. In a booming economy, it’s not just the Gates-es who want to redecorate. Despite their reputations for selling six- and seven-figure items, auction houses sell tons of jewelry, antiques and pictures by lesser-known artists for just a few thousand dollars, making this a great time for them to win new middle-class customers. A scandal could send sellers and shoppers elsewhere–perhaps even to the Internet, where auction sites are exploding. Last week eBay listed a $25,000 Warhol painting and a $19,500 Degas drawing; eBay’s Great Collections site, launched last fall, guarantees authenticity and charges just 7.5 percent commissions to sellers, while buyers pay no fees at all.
The Internet art biz will never have the cachet of Sotheby’s and Christie’s (though Sotheby’s launched Sothebys.com auctions last year). Still, for novice art buyers, Web sites have advantages: they’re not snooty or intimidating. Boasts eBay senior vice president Steve Westly: “The future is heading in our direction.”
Now the art world is waiting to see how big a hit Sotheby’s may take. Last week’s housecleaning won’t appease the attorneys leading a class-action lawsuit that could cost both Sotheby’s and Christie’s tens of millions in damages. Sotheby’s could also face heavy fines from the government. It’s unlikely second-tier auction houses will benefit much from the big firms’ woes; they are so much smaller that they’re hardly competition. The big houses have been embarrassed before–Christie’s chairman David Bathurst resigned in 1985 after admitting he’d lied about the sales of two impressionist paintings–and have bounced back as strong as ever. But most experts see only bad news. Says Josh Baer, publisher of an art newsletter: “Anything that makes the art world seem criminal or seedy hurts everybody.” By the time the gavel falls on this scandal, even the Mona Lisa may be frowning.
