The Sotheby's Price Fixing Scandal

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 Friday, January 13,^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

 
 
Consider & comment:
Please use this space to respond to your classmates' work and to engage in lively discussions on the day's topic. Keep your comments concise and conversational by responding to others, rebutting or supporting their ideas. Use the comment box below for these observations.