Brussels, 19 April 2002
Commission brings its case against presumed cartel between Christie's and Sotheby's
The European Commission has today sent a so-called 'Statement of Objections' to Christie's and Sotheby's, setting out its preliminary conclusion that the world's two leading fine art auction houses breached European Union competition rules by colluding to fix commission fees and other trading terms. The Statement is based on evidence made available to the Commission. The sending of a Statement of Objections is a procedural step in EU antitrust proceedings. It does not prejudge the outcome of the investigation as the parties will have the right to reply to the Commission's objections, to have access to the file and to request a formal hearing.
In a 50-page document addressed to Christie's International plc and Sotheby's Holdings, Inc, the Commission has informed the companies that, based on the evidence in its possession, it believes that they entered into an anti-competitive cartel agreement in the course of 1993. According to the Commission's preliminary findings, the agreement affected auction sales between 1993 and early 2000, when the parties appear to have recovered their freedom to set prices independently.
The purpose of the cartel agreement was to reduce the fierce competition between the two leading auction houses that had developed during the 1980's and early 1990's. The most important aspect of the agreement consisted in an increase in the commission paid by sellers at auction (the so-called vendor's commission). But the collusive agreement concerned many other trading conditions, such as advances paid to sellers, guarantees given for auction results, payment conditions.
In the art auction market, apart from the vendor's commission, fees are also paid by buyers (buyers' premium). Auction houses may also compete through a number of other mechanisms such as the paying of advances on payments and providing guarantees to the sellers as to the minumum price to be achieved at auction.
According to the Statement of Objections, 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, meeting at their respective private residences in London or New York. These first high-level meetings were followed by regular gatherings and contacts between the companies' Chief Executive Officers.
The Commission's investigation started in January 2000, when Christie's approached both the United States's Department of Justice and the European Commission with proof relating to a cartel between itself and Sotheby's and applied for leniency in both jurisdictions. The evidence consisted mainly of documents that Christopher Davidge, former CEO of Christie's, had gathered about contacts between the two auction houses.
Sotheby's subsequently also applied for leniency in Europe. The two auction houses are cooperating with the Commission's investigation.
Christie's and Sotheby's are the world's leading players in a market which can be characterised as a duopoly: their joint market share is around 90%.
Christie's, which was established in 1766, has its headquarters in London, but has been a subsidiary of French company Artémis SA since 1998.
Sotheby's was also founded in the 18th century but has since become a a publicly-listed company both on the New York and London stock exchanges and has its headquarters in New York. Its majority shareholder is American entrepreneur A. Alfred Taubman, who was also its chairman during the entire period of the suspected cartel activity.
A statement of objections is a procedural step in proceedings under Article 81 of the EU Treaty, which bans cartels and other damaging concerted business practises. It does not prejudge the outcome of the investigation, as the companies will have the right to answer the Commission's objections, to have access to the file and to request a formal hearing.
The companies have six weeks to reply in writing to the Commission's allegations.
There is no fixed deadline to conclude antitrust investigations. Their duration is determined largely by the complexity of each case, the exercise by the parties of the rights of defence and by the need to comply with the Commission's internal consultation and other procedures.
The Commission in 1996 adopted rules providing partial or full immunity from fines for companies that unveil or provide significant information on price-fixing, market-sharing or other anti-competitive agreements. These rules were updated in February 2002(see: IP/02/247)