Auction Probe Update - price fixing case involving Sotheby's and Christie's - Brief Article

Art in America, Dec, 2000 by Stephanie Cash, David Ebony

In early October, former Sotheby's CEO Diana D. Brooks pleaded guilty to conspiring to violate antitrust laws. She also accused former chairman A. Alfred Taubman of directing her to conspire with rival Christie's in order to fix the fees sellers must pay the auction houses. Facing a possible three-year jail term and hefty fines, Brooks is scheduled for sentencing on Jan. 5.

As we go to press, the focus of the federal investigation is on Taubman, who denies Brooks's accusations. Although to date he has not been indicted in the case, Taubman responded to her plea with legal action. In mid-October his lawyers were given permission by the federal court to subpoena witnesses who could testify on his behalf in the event of a trial. Judge Lewis A. Kaplan, who is hearing the case, ordered Christie's to turn over to Taubman's lawyers documents that were presented to federal investigators by former Christie's CEO Christopher Davidge about a year ago. The motion will enable Taubman's lawyers to build a defense based on information in these documents, which are widely believed to contain details of the alleged conspiracy.

Meanwhile, court papers filed in late October describe details of the $512-million settlement in the class-action suit brought against the two auction houses by 120,000 buyers and sellers [see "Front Page," Nov. `00]. The claims, covering the period from Sept. 1, 1997, through Feb. 7, 2000, are to be paid mostly in cash, although 20 percent will be in the form of discount certificates, good for five years, which can be used toward the payment of commissions on future sales. Following preliminary approval by Judge Kaplan, each company will pay out $100 million within 30 days. Upon final approval, an additional $106 million must be paid in cash, plus $50 million in certificates to the customers named in the suit.