Only the Sotheby’s/Christie’s duopoly can do it, and nobody dares make a comment on the possibility of some sort of mutual manipulation of the market by them. I am referring to auction house guarantees, which caused a bit of a public shock when Sotheby’s supposedly took a bath on their sale of impress Sotheby’s and Christie’s, Colluding Again
ionist and modern paintings sale held on the evening of November 7th in New York City.
I read a striking comment about this in an article in the Art Newspaper’s December 12th online issue (186) which reported that “this summer both Sotheby’s and Christie’s imposed a cap on guarantees of around $500 million each for the year, according to a regulatory filing by Sotheby’s and confirmation from senior Christie’s executives”. Notice that they both acknowledged and agreed to the limit and the government couldn’t care less. The duopoly just imposes what it wants on the public without any recourse. There is not one organization or government body that takes any interest or makes a public comment on their mutually beneficial decision. Colluding to decreasing risk is their obvious goal. Excuse me, but where’s the word “competition” between them in the equation? Remember how and why a duopoly works: an economic situation in which two powerful groups or organizations dominate commerce in one business market or commodity (Encarta Dictionary).
Dealers of course are totally impudent; they have sold out to the duopoly for their own survival or are used by the duopoly for their infamous “third party loans/guarantees” where they can off load some of the risk. More incestuous is the fact that these third parties may bid on the property, a blatant conflict of interest and unfair competitive advantage. If I owned an item, it is illegal for me to bid on it, and the auctioneer knows this. In the context of their “joint ownership”, where the auctioneer is a direct partner and has an interest in running up the price, all of a sudden it is legal. And they must, when, according to the article, the guarantees were in the mid-range of the estimates.
As I often say, the duopoly lost the battle but won the war after their conviction for collusion back in 2000. Upon examining all of their joint practices since that conviction, they have enjoyed stunning growth and an unregulated imposition of their mutually conceived methods. Add their reciprocal agreement on guarantees to the list.