In Carol Vogel’s article “One Market Remains Sound: Money Is Still There for Best Art” in Saturday’s (11/17/07) New York Times, she reported that “when Sotheby’s or Christie’s is nervous that a work will not do well, it is not unusual for the house to contact potential buyers and offer special payment terms.” (my italic) I would think as a journalist she might consider writing about this blatant form of the duopoly’s conflict of interest in such an auction, and how it is manipulative and unfair to the buying public to compete against such an undisclosed disadvantage. In my mind, this is a practice that calls for a serious criminal investigation. The manipulation of the public auction concept is being stretched beyond any form of fairness.
With the public already being controlled in the bidding process with secret reserves, sham bidding, a non-negotiable buyer’s premiums, (and its lack of disclosure on a seller’s statement of sale results), and conflicts of interest in their ownership of lots, this additional method to rig a sale has the potential to not only keep the playing field tilted, but corrupts the whole process. Is it then the duopoly’s decision as to whom gets the advantage, and the rest of the competition is “chopped liver”? It happens only if you have powers in the industry that go unchecked. There is not one who can stop these practices or even make an attempt to confront them to question the effect on the public.
Rigging the bidding process of an auction is a disgraceful ruse on the public. Its acceptance by a bidder is an acknowledgement that no single bidder or group of bidders (dealers) has the strength of character to questions these practices and the integrity of the auction process. It is a shame that there cannot be any confidence or trust in the public auction format as now practiced, just a sheepish acceptance. The government was able to defeat the “rings” of dealers who manipulated auction results. It’s time for the government to look at this situation with the same purpose and goal.
Like I always say, the duopoly lost the battle (collusion conviction and penalty back in 2001), but won the war (ability to now act with impunity in operating methods). What will their next ploy be? Continuing their lock-step rise of the buyer’s premium is already yesterday’s news.