As Enron was well versed in the smoke and mirrors of accounting practices, so too has Sotheby’s and of course Christie’s been encouraged with the buyer collusion offered by the irrevocable bid sham. This is now the duopoly’s new form of giving guarantees, and still collecting generous fees. With their intractable buyer’s premium, they will always be able to manipulate the market.
As bad as the gross conflict of interest on getting a seller’s commission and fixed buyer’s premium on an item, the irrevocable bid casts the greatest form of deceit on the buyer. The seller basically is made oblivious to this shenanigan, in the hope of the auctioneer’s ability to cheat the market with a new, higher secret reserve. Oh well, so much for printed estimates; the new secret reserve could be over that printed estimate. Who thinks these things up?
If ever the process of rigging an auction were ever so blatant, they attempt to call a disclosure mark in the catalogue “transparency”. If this is transparency I guess you would start the bidding at that irrevocable bid. But the irrevocable bid is designed to generate the collusion with a willing buyer(s) to not just take a “third party interest”, but also potentially collect fees for actually losing the bid. It sounds so much like how outlawed “dealer rings” use to work.
As a competitive bidder against such inside information, why should I be at such a disadvantage? Mixing in “chandelier bidding” with a secret reserve/irrevocable bid, where do you draw the line in the public auction process? The fault lies with dealers and individuals who are seduced with the auctioneers swagger and ability to get the goods. By creatively using a form of manipulation in the pricing process they are in better control of the ultimate disposal of the inventory. However, a stocking dealer should be on equal footing with these auctioneers, without the need for deceptive enticements.
The control of the merchandise that passes from the seller to the point of sale through the auctioneer has become a grey area for manipulation. The buyer’s premium is the money tree; guarantees and irrevocable bids are add-ons to this duopoly’s industry auction design. Go explain this process to anyone outside the industry and they’ll think it can’t really operate that way. Think again.