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Auction executives indicted
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May 3, 2001: 1:21 p.m. ET
NY jury indicts former chairmen of auction houses Sotheby's and Christie's
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NEW YORK (CNNfn) - A federal grand jury in New York has indicted the former chairmen of Sotheby's Holdings Inc. and Christie's International, the world's two largest auction houses, on price-fixing charges.
The indictment, handed down on Wednesday, charges former Sotheby's chief, Alfred Taubman, and Christie's former chief, Anthony Tennant, with conspiring to fix auction commission rates charged to sellers in the United States and elsewhere, according to the Justice Department.
Justice officials said the two auction houses engaged in a six-year conspiracy and charged U.S. sellers at least $400 million in commissions. The two companies control more than 90 percent of all auctions of artwork, jewelry and furniture worldwide.
The two were charged with U.S. antitrust law violations that carry a maximum penalty of three years in prison and a $350,000 fine.
But in Tennant's case, all that may be irrelevant.
Tennant, who worked at Christie's from 1993 to 1996, is a citizen of the United Kingdom. And in a statement released by Tennant, he indicated that "as a U.K. subject, Sir Anthony is not subject to the jurisdiction of the U.S. courts and accordingly will not be taking part in any of the pending proceedings."
Sotheby's current chairman, Michael Sovern, said none of his current employees "was involved in or aware of a breach of the antitrust laws."
If found guilty, Taubman and Tennant could face three years in prison and $350,000 fines. The fines could be much larger -- by law they might have to pay twice the amount they gained from the crime, or twice the loss suffered by customers, if either of those amounts adds up to more than $350,000.
Taubman was chairman at Sotheby's (BID: Research, Estimates) from 1983 to 2000. Tennant was chairman at Christie's from 1993 to 1996.
The indictment said Taubman and Tennant agreed to raise prices by fixing sellers' commission rates, set nonnegotiable sellers' commission schedules, and exchanged customer information for the purpose of monitoring adherence to the commission schedules.
The Justice Department said the two undercut each other's offers to sellers, costing sellers their principal bargaining tool.
"This case will show that these individuals mastered the art of price-fixing," said James A. Griffin, deputy attorney general in charge of the criminal antitrust enforcement program.
Last month a federal judge approved a $537 million settlement of price-fixing lawsuits brought by customers of Sotheby's and Christie's. The auction houses are sharing the cost of the settlement.
And last October, Sotheby's and its former chairman and chief executive, Diana D. Brooks, pleaded guilty to separate charges of fixing auction rates. Sotheby's has been sentenced to pay $45 million; Brooks has not been sentenced, the Justice Department said.
Christie's has been cooperating with the investigation under a leniency program that could protect the auction house from criminal prosecution if it voluntarily provides information to prosecutors.
The investigation is being handled by the antitrust division's New York office and by the FBI in New York.
-- from staff and wire reports 
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