(SOME THOUGHTS I HAD BACK IN 2002. THIS WEEK CHRISTIE’S JUST MATCHED SOTHEBY’S RECENT BUYER’S PREMIUM INCREASE)
When all the trials and tribulations of the Sotheby’s-Christie’s affair are sorted out and dissipate, one key element of the entanglement should emerge. How could they be allowed to operate in a manner that would be the envy of any other industry?
Collusion on commissions is not really the correct indictment against them. All industries have some benchmark and manner of receiving a commission or fee. The real issue is the grave conflict of interest they fashioned with the buyer’s premium.
In the late 1970’s, they created the buyer’s premium, which now drives the revenue of the decorative and fine art, as well as other industry auctions. What has pushed this migration is the fact that they have been able to collude more aggressively with this new format than by setting commission rates.
The auction process is most efficient when parties have a format that is uniform and time tested. That process requires the time, money, and commitment of the auction company to its client, the consigner. After all, they wouldn’t be in business if they didn’t have someone to give them something to sell. An investment banker, real estate broker, or any party that receives a selling commission would not find comfort in their industry if they were receiving a glorified kickback from the buyer.
The buyer’s premium is most insidious because Sotheby’s and Christie’s have allowed the issue of conflict of interest to become the industry standard. Perhaps a review of these practices by a courageous attorney general will confront this iniquitous way of doing business.