Dealers in France, and by default around the world, suffered a devastating defeat when the French government lifted major constraints on how auctioneers operate. When Francois Curiel of Christie’s say the report is “good news for us”, it can’t be good for dealers, consigners, or anyone else, but them. By the government of France’s attempt of “easing and modernizing” auction regulations, they have passed on an opportunity to take the deception of sham bidding and conflict of interest out of the industry.
But what would anyone expect with the Sotheby’s/Christie’s duopoly; arm twisting with their financial and influence muscle is a just a fact of life. It doesn’t matter if it is the government of France or the New York State legislature (blog 8/1/07-“Proposed NY State Legislation; Who Are the winners?”). There is not competitive voice that exposes their self serving methods like relying on the deceptive hiding of a reserve, while accepting bids they know they cannot accept.
Perhaps the most demoralizing thing for dealers in France are the new rules giving auctioneers the ability to buy and sell, like a dealer. Already 10% of both Sotheby’s and Christie’s global turnover, private sales should prove to be boon for them, at the expense of both dealers and collectors. Their financial ability to manipulate the market with both auction and private sales, along with a combination of both is very compelling and dangerous. It seems that this type of conflict of interest is tolerated by government and its participants only in this industry. Financial firms can act as agent or their own account when buying securities. The difference with these auctioneers is they can blur the lines to their advantage at the expense of both the buyer and seller.
I guess I should start to wake up and smell the roses for the fate of dealers as we know them. The only vestige off limits for the auctioneers in France with these new rules is not being able to sell new goods. Of course that risk has to be placed on the dealers of contemporary works, where it is incumbent upon the dealer to create an initial market price. No easy chore. But just as the once vibrant dealer trade has withered in the US and around the world, France will now lend a helping hand to their demise.
With the guaranteed revenue stream of a non-negotiable (and ever rising) buyer’s premium and a seller’s commission, minimal investment in long term inventory, and the ability to employ tactics that bait buyers, dealers will always be at a competitive disadvantage. With no financial or organizational voice to counter the auctioneer’s focused goals, dealers will slide further as an influence for fair trade and transparency in the industry.