Words: Tom Ward
When it comes to British institutions, you’d be hard pressed to beat London’s brace of prestigious auction houses, Sotheby’s and Christie’s. Both established in the 1700s, the auction houses have had their share of record breaking deals, rivalry, and scandal. Occasionally, though, the two houses work together, as was the case throughout much of the 1990s into the early 2000s.
Just over twenty years ago, the auctioneer’s gavel was switched for a judge’s when it was discovered that the two auction houses had been cooperating to fix prices, driving up their margins to mutual benefit.
The European commission first got a whiff that something was rotten with the (then) £2.5bn per year art market at the turn of the millennium. Over an investigation that took up much of the following two years, the commission found both companies guilty of serious violations, which it described as “an anti- competitive cartel agreement in the course of 1993 which lasted until early 2000..The purpose of the cartel agreement was to reduce fierce competition between the two leading auction houses that had developed during the 1980s and early 1990s.”
The scandal came at a time when Christie’s and Sotheby’s controlled 90% of the world’s market for high end furniture, art and jewellery.
The investigation found the corruption was prevalent throughout both houses. So, big fines all-round, yes? Well, not quite. While Sotheby’s had to stump up nearly £13m in fines, Christie’s was miraculously let off without a fine in what many saw as a rap on the knuckles thanks to its cooperation with the commission which included whistle-blowing and sharing of evidence.
Sotheby’s nevertheless put on a brave face. ”We aren’t commenting on the decision itself, but we’re pleased that it brings this chapter in the history of the art market closer to a conclusion,” said a spokeswoman at the time. Still, the fine represented just 6 percent of the auction house’s annual turnover (in May 2022 Sotheby’s sold the The Macklowe Collection of art for a record $922m (£738m).
In terms of personnel fallout, Sotheby’s owner A. Alfred Taubman (who died at the age of 91 in 2015) was handed a ten month sentence for antitrust violations and fined $7.5m (£6m). Despite his wealth and clout, Taubman served nine out of ten months before retiring to Florida and putting pen to paper on his memoirs. Donald Trump attended the book launch. And, like the former president, Taubman was apparently crying foul long into his old age “They were putting out a story that Sotheby’s was guilty and [Christie’s wasn’t]—and they started the thing!” he’s reported to have said.
Fat cat Taubman’s conviction hinged on evidence from Sotheby’s CEO Diana Brooks, who ratted him out to save her own skin in a plea deal with the commission. According to a Vanity Fair story covering the trial, Brooks was a tough character:
“[Michael Ainslie, former CEO whom Brooks replaced in 1994] described Brooks’s business style as “Attack, attack, attack.” At a Christmas party, he presented her with a pair of brass balls and told her, “Try cracking these, Dede, and stop cracking mine.” “I didn’t know you had any,” Brooks replied.”
Brooks did step down as Yale trustee amid the fallout, serving 1,000 hours of community service as well as six months of house arrest with an ankle bracelet.
On the Christie’s side, ex-CEO Christopher Davidge (nicknamed “the Golden Hamster” among his employees) admitted to masterminding the scheme with Brooks, but won immunity from prosecution after he also flipped. In the end, he received an $8m (£6.4m) severance package and is now involved in the contemporary Asian art scene. Meanwhile, Eton-educated (yup, surprise) Anthony Tennant was also indicted, but couldn’t be extradited to the U.S. where the trial was held. Price-fixing isn’t a crime in the UK.
Nevertheless, lawyers threatened legal action against both houses, with 130,000 private collectors and dealers claiming they’d lost millions through the dodgy deeds with both houses agreeing to pay £340m in a class action lawsuit.
All in all, the fall-out was relatively minor and with a few personnel switches and relatively minor payouts, both houses were free to operate, their rivalry undiminished. Nor would it be the last controversy for either house…
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