Numerous sources report the U.S. Justice Department is continuing its antitrust investigation of Sotheby's and Christie's New York operations and is also continuing to investigate whether prominent art dealers coordinated auction bids in an effort to suppress the sale price of certain works. And, in related action, Bernstein Litowitz Berger & Grossmann LLP has filed a class action lawsuit against Christie's International, Sotheby's Holdings, Inc. and Sotheby's Inc.  "The Plaintiff," say the attorneys in a release to the business press, "brings this action on behalf of all persons who sold" items through Christie's and Sotheby's auctions during the period March 1995 through the present, and on behalf of purchasers of such items during the period January 1, 1992 through the present. 

Christie's recently released a statement indicating it was cooperating with federal investigators, giving the Justice Department information about "possible conduct" at Christie's that was relevant to their investigation of antitrust actions in the art world.  In exchange for this "cooperation", Christie's was "conditionally accepted" into the Justice Department's amnesty program, according to a statement from the auction house's general counsel, Jo Backer Laird.  Christie's claims the conduct took place prior to the sale of the firm over a year and a half ago.

The investigations began three years ago when the U.S. Attorney's office for the Southern District of New York began subpoenaing documents from Christie's, Sotheby's and reportedly more than a dozen top NYC art dealers.  The investigation is said to be far ranging, including allegations of possible collusion by Christie's and Sotheby's in setting commission fees of sellers and possible collusion among art dealers buying at auction.

Ms. Laird did not provide details of the information given to the Department of Justice or what the amnesty deal would mean for Christie's.  Legal sources say targets of criminal prosecution often receive more lenient treatment after volunteering information about their actions, although Christie's still denies any wrong-doing in its official statements, saying "Christie's believes that it has acted properly at all times."

Christie's action comes just about a month after the abrupt resignation of its former chief executive of six years, Christopher M. Davidge.

Sotheby's also confirmed that it had documents subpoenaed by the Justice Department.

The action against art dealers relates to the possibility of "bid-rigging" or "bid-pooling" by art dealers. Some feel the practice keeps prices down and allows dealers to resell art work at high profits, although most dealers question whether this would be possible in today's competitive environment with so many collectors involved and bidding at auction.  Some art dealers even point to partnerships actually boosting the prices at auction, allowing partnerships to pay more than a single dealer could afford to risk.

According to AP reports, Justice Department spokeswoman, Jennifer Rose, confirmed the agency's anti-trust division "is looking into possible anti-competitive practices within the (fine art auction) industry."

Meanwhile Bernstein Litowitz Berger & Grossmann LLP filed its lawsuit on behalf of a seller through the Christie's and Sotheby's auctions, who alleges that on or about January of 1992, the major auction houses conspired to fix the price of commissions they charged to buyers at 15% of the first $50,000 of merchandise purchased and 10% of any amount over $50,000.  Prior to that time, buyer commissions were a flat 10%.  The Plaintiff further alleges that on or about March 1995, Christie's and Sotheby's conspired to fix the prices of the commissions paid by sellers.  At that time, both adopted identical detailed sliding-scale commission rates to sellers, according to the attorney's release.

The release says,  "the action was filed following Christie's public admission that it has supplied evidence of the price fixing of auction commissions to the United States Justice Department, which has bee investigating anti-competitive practices in connection with Christie's and Sotheby's auctions." 

Jeffrey A. Klafter, who is the partner in charge of the Antitrust Practice Group at Bernstein Litowitz Berger & Grossmann LLP, is also the contact at the law firm for this case.  Prior to joining the firm, Klafter was an attorney with the U.S. Department of Justice, Antitrust Division, where he served as a member of the trial team in the landmark antitrust case United States v. IBM.  Klafter asks anyone who has information on Christie's and Sotheby's commission practices to call him at 800-380-8496 or 212-554-1400.

 

Christie's International has announced new commission and higher premium structures.

Although the auction house says its action will "benefit both buyers and sellers", it is hard for this observer to see how.  Effective as of March 31, 2000, Christie's will charge a buyer's premium of 17.5% on the first £50,000 ($80,000) and 10% on any amount over £50,000 ($80,000) on property sold in the firm's principal salerooms.   That's a hike of 2.5% on the first $50,000 and a hike of 7.5% on the next $30,000.  The rate hike comes just in time to hit the April photographs auction in New York and the May photographs auction in London.

Incredibly, Edward J. Dolman, Christie's new chief executive officer, claims "Christie's new owner and new management has been considering a change in our commission and premium structure for some time. Its announcement has simply been accelerated by the recent events (see above story for the "events" currently involving Christie's problems with commission and premium structures)."

That's the bad news.  The good news?  It would strike me as highly unlikely, but not impossible, any auction house will follow suit any time soon.  Sotheby's is staring at Department of Justice action and a civil class action suit over alleged collusion with Christie's.  What neither house needs right now is for their actions to confirm the rightness of these actions.  Just think of what impact hiking rates in tandem once again just after criminal and civil actions are announced might have on a judge or jury.  And if Sotheby's doesn't follow suit, Christie's is virtually assured of losing market share to Sotheby's and other auction houses like Swann and Phillips.

Christie's claims its "new" consignor's commission will be calculated on annual purchases as well as sales--something that high rollers have reportedly been doing for years in any case.

Christie's claims it has instituted what it calls "significant reductions in the consignor's commissions charged to consignors of property.  At almost all levels of aggregate transactions, from £60,000 ($100,000) through £3 million ($5million), the commission charged to all private, trade and institutional clients will be lower than on the current schedule."  However, the auction firm provided no details of what this structure would be and didn't indicate what impact it would have on areas that were traditionally negotiated such as illustration fees, insurance and buy-ins.

According to Christie's, clients who purchase or sell £3 million ($5million) or more in any calendar year will receive special terms that will be negotiated on a case-by-case basis.  I know of no one except London's mysterious L080 from the Jammes sale who would have qualified this past year in the photographic arena for this "largess".

 

Swann Galleries' addition of a small but respectable auction immediately after the AIPAD show was a major success for them.  Buy-ins were extremely low (13.6% by lot, including a couple just after the sale) and the sale, which consisted of a mere 103 lots (about 20% of its last sale), made a very healthy $724,500.   Most of the major pieces sold, and sold very well (14 lots broke into five or six figures), but lots in general were hitting in the estimates range or above them.  The room, phone and order bids (bids left earlier) all contributed to the sales activity and prices.

Lot 6, which was an archive of 170 Circus images, brought just under $30,000 (est.$14,000-$18,000) with the 15% buyer's premium from a dealer on the phone.  A very happy auctioneer Daile Kaplan, cheered by the results, exclaimed, "This is fun!"

A group of 35 photographs of Java from about 1900 was knocked down for $17,250 (est. $3000-$4,000) by a collector on the phone.  The action was fairly frantic and Kaplan joked at one point: "Anyone else care to jump in?"

The Karl Blossfeldt "Urformen der Kunst" book ($5060) and portfolio both did well.  I believe the portfolio set a new record at $14,950.  It sold, not surprisingly, to a dealer in the room.

The three sets of Camera Work gravures (Lots 38-40) went for very healthy prices, all above estimates.  Two sold by phone and the last and most important lot went to San Francisco dealer Rob Tat for over $16,000 (est. $7,000-$9,000), who bid in the room.

But the real excitement had to wait until Lot 42, the bound volume of 99 large-format Curtis photogravures in "pristine" condition.  After a pitched battle between phone bidders and Christopher Cardoza, a Minneapolis dealer in Curtis material and one of the largest such dealers in the U.S., the plates went to Cardoza, who was in the room, for an astounding $178,500 against the estimate of only $40,000-50,000.

The Paul Outerbridge, Jr. New York City abstraction (Lot 85) brought $18,400 (est.$20,000-$30,000) from a collector on the phone. 

The second lot to break into six figures was the Ponting archive of 125 contact prints (Lot 87).  It brought $123,500 from a dealer after a dramatic duel between phone bidders.

Finally a nice (1960-70s) Eugene Smith "Walk to Paradise" sold for $23,000 to a collector.

All prices above include the 15% buyer's premium.

An exuberant Kaplan said afterwards, "The sale was a wonderful cap to a busy weekend of photography in New York.  We were ecstatic with the strong prices overall and the fact there were so many new faces at the auction."

Swann's gamble had paid off, proving: 1.) Prints at all levels will sell well, if you don't overload the market; and, 2.) AIPAD week is fine for ONE small auction.  Now if the auction houses can only restrain their greed in the Spring and Fall, we might see a return to reasonable buy-ins and a "complete" market rather than the split between a few high-end pieces setting records and other material languishing.  Don't, however, expect this to happen.  The market is still very strong, but it's also still relatively small and can't absorb all of this material, especially on top of the electronic auctions (Ebay, Sotheby's, Art.net).  Sotheby's has already announced an extra sale of The Southland Companies (Seven-Eleven Stores) Collection for the spring.

 

AIPAD had another successful show this past weekend, but reportedly attendance was down slightly from last year.  Most dealers reported good business as usual at the show, and unusual and rare images did seem to do well.  A larger than normal contingent of French dealers attended the fair this year.  At one point I thought I was still at Paris Photo rather than AIPAD in NYC.
 

As many of you know, there has been another potential problem with photographs being printed well after a photographer has died and sold as vintage.  Some Lewis Hines prints have been called into question.  Stephen Perloff in the Photograph Collector Newsletter has written the very best and latest account of this situation. 

Some of you may be aware that I have served on the non-profit Photo Review board that owns the Photograph Collector.  I have made arrangements for any of my email readers to request a copy of this newsletter with the latest developments on the Hines matter as long as they are available.  The cost will be $15 for this single copy.  You may charge this amount by calling the Photograph Collector at 215-757-8921.  Or you can fax your address (both billing and shipping), credit card number, expiration date, and name on your credit card to 215-757-6421.  You may also subscribe to this excellent printed newsletter for a full year for $149.95 and you'll get this issue free (13 issues in all).  International airmail is $169.95.