Antitrust Illegality & Intrigue: It's Better Than Fiction
By Robert W. Doyle, Jr. Sheppard Mullin Richter & Hampton LLP
Antitrust aficionados should not miss the recently published price-fixing thriller about greed, collusion, priceless works of art, monopoly pricing, consumer harm, DOJ subpoenas, lust, adult circumcision, multiple marriages, divorces and office romance. Just what you would expect in an antitrust page-turner! All of this takes place in "The Art of the Steal: Inside the Sotheby's – Christie's Auction House Scandal," by Christopher Mason (Putnam; 406 pages; $26.95; 2004). It's a detailed exposition of real life criminal price fixing in the international art auction house marketplace, a market dominated by Sotheby's and Christie's, who combined, controlled about 90% of all masterpiece sales. Rather than compete head-to-head, in the mid 1990's, the Chairmen and CEO's of the two leading auction houses chose, instead, to meet, collude, and raise the commission rates of what both buyers and sellers pay to trade in Picassos, Monets and Manets. Secret meetings took place in New York and London where higher rates were planned, implemented, and maintained.
Mr. Mason is a storyteller with a knack for developing and embellishing the juicy details of the international art-buying nouveau riche. He tracks the elaborate lifestyles of the auction house elite, but focuses on the series of meetings between Sotheby's head, Alfred Taubman, and Christie's Sir Anthony Tennant, as well as the chief executives, Christopher Davidge of Christie's and Diana Brooks of Sotheby's. During several Taubman/Tennant encounters, Mr. Mason even observes that imported cigars were served by Mr. Taubman, creating the requisite "smoke-filled room" environment for the price fix.
Mr. Davidge was the manipulator and (fortunately for the antitrust authorities) the chronic note-taker throughout the conspiracy, much to everyone's surprise. Mr. Davidge recorded the fascinating details of each meeting and the detailed negotiations that took place. Ultimately, over 600 pages of Mr. Davidge's notes which laid out the details of the conspiracy were turned over to the Antitrust Division. Of course, no one at either company ever thought such notes were taken, much less retained by Mr. Davidge or anyone else. In return for the notes, a deal was struck with DOJ. Christie's and Mr. Davidge faced no criminal repercussions. But Sir Tennant avoided prosecution by remaining in England. He will be arrested if he ventures into the United States.
Similarly, Ms. Brooks of Sotheby's cut a deal with DOJ and testified against her former Chairman, Mr. Taubman, claiming he instigated the entire conspiracy. In 2002, she served her six-month sentence under house detention strapped to a black electronic ankle transmitter in her multi-million dollar penthouse atop New York City. Taubman served 10 months in federal prison. But, he was delivered to the penitentiary in his silver-painted Gulfstream IV and, on fine china and linens, was served hot dogs and caviar in flight, his favorite meal. I suspect he was only half pleased with the prison menu!
Both auction houses paid over $500 million to their disgruntled customers after the civil matters were resolved.