Former Sotheby's chairman Al Taubman and former Guinness PLC chairman Anthony Tennant.
(Photo: From left, Neil Rasmus/Patrick McMullan; Alastair Grant/AP Photo)
DAY 11 Today is Wednesday, June 15,th and we will probe deeper into the relationship between auctions and the art market through the case of
the Sotheby's price-fixing scandal, which shocked every corner of the art world from 2000 to 2002, when the case was finally settled. Read about
how Sotheby's, led by Chairman Al Taubman and CEO Dede Brooks, colluded with retired former chairman of Christie's, Sir Anthony Tennant, to
fix commission rates charged to buyers and sellers who did business with their respective auction houses. Both firms were charged by U.S.Justice
Department with breaking the Sherman Anti-trust Act of 1890, which was hugely important for safeguarding against under-the-table agreements to
set prices at levels that would not prevail in a competitive market and thusly, preventing monopolies that would hurt consumers by overcharging them
while reaping high profits and slowing production. Comment on at least two ways in which this scandal has (or has not) changed the perception
of the auction house as a necessary and essential place to do business in the art world. In other words, could the art world do without the auction
house and if so, what might that look like?
Readings
Listen to author Christopher Mason explain how he began covering the price-fixing conspiracy http://video.cnbc.com/gallery/?video=697473416;
hear Alfred Taubman's thoughts on his meetings with Sir Anthony Tennant http://video.cnbc.com/gallery/?video=697487072; and see some of
the handwritten notes detailing the terms of the "fix" http://www.cnbc.com/id/23812895/ from CNBC's American Greed, Season 2, Episode 16,
"Soaking the Rich at Auction".
Read Orley Ashenfelter and Kathryn Graddy,"Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby's and Christie's,"
Journal of Competition Law and Economics I (I) 3-20, 2005 http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/ashenfeltersothebychristie.pdf
and James B. Stewart's, "Bidding War: How an Antitrust Investigation into Christie's and Sotheby's Became a Race to See Who Could Betray
Whom," the New Yorker, Anals of Law, October 15, 2001, p. 158 https://www.msu.edu/course/ec/360/george/Readings/Bidding%20War.htm
Individual Contributions
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Consider & comment:
What did you think of today's readings and wiki features? What issues if any did they raise for you? How did the audio visual material provided support your understanding of this topic? Comment on your classmates' posts. Leave your comments in the box below.