Alfred Taubman, chairman and main shareholder of Sotheby's, and Diana Brooks, general-manager of that company, both resigned from their posts on February 21st 2000 amid speculations about a possible take over of the U.S auction house. They will be replaced by Michael L. Sovern, former chairman of the University of Columbia, and by F. Ruprecht, who has so far been in charge of the American department of Sotheby's since 1994.
Taubman, 75, who acquired Sotheby's in 1983, and Diana Brooks, 49, who has been working for this auction house since 1979, have decided to resign pending investigations by U.S justice into a possible breach of anti-Trust laws by Sotheby's and Christie's. Both auction houses are being suspected of having agreed in 1992 to fix a 15% commission on purchases for all items bought under $ 50,000 and a 10% commission for those sold over that price.
It however seems difficult to prove a possible collusion between the two auction houses especially as an increase on buyer premium results in a lower commission charged for any seller and enables to attract collectors more easily. Still, U.S Justice has been in possession of a document dating from mid-1995 and proving that Sir Anthony Tennant, Chairman of Christie's between 1993 and 1996, had had a conversation with Alfred Taubman regarding this question of commissions.
Any of these auction houses would have lost the important U.S real estates market if it had renounced to engage in such competition. However Sotheby's and Christie's both decided in 1995 to increase selling premiums on a common scale, a decision implying a mutual agreement. Some 40 buyers went on to lodge a complaint before U.S Justice and if Sotheby's and Christie's were found guilty of such manoeuvre both would have to indemnify thousands of people.
Christie's made a decisive move in deciding to co-operate with U.S Justice in exchange for immunity and then raised its buyer premium up to 17,5% while reducing its selling premium in an attempt to keep aloof from Sotheby's. Now Sotheby's cannot take a similar decision without becoming suspicious while Christie's now seems more attractive for sellers.
Sotheby's shares dropped from $ 47 to 17,15 during the past six months and most shareholders showed their anger while wishing a significant gesture to preserve the already damaged image of this company.
Such upheaval comes at a bad time for Sotheby's, which invested heavily for its headquarters in New York. According to well-informed sources this issue was the main reason behind the resignation of Mr Taubman and Mrs Brooks especially as investments went well beyond projected figures when Sotheby's Website was launched.
Diana Brooks was suspected as being the main beneficiary of such investments at the expense of shareholders but Diane de Beauvau-Craon, head of Sotheby's France, rejected such assertion and stressed that the functioning of the U.S Stock market was so much transparent that it did not allow any fraudulent operation.
Meanwhile, there have been insisting rumours about Mr Taubman's intention to sell all his company shares 17 years after saving the former British auction house from bankruptcy. Now Sotheby's might be the target of a possible take-over operation from the French LVMH group headed by Bernard Arnault.
LVMH bought Phillips and then the Tajan Parisian group in an attempt to challenge his archrival François Pinault, who acquired Christie's for £ 721 million in 1998. Arnault has already a participation in E-Bay which is the most serious candidate for Sotheby's take over. Another candidate might well be Henry Kravis, founder of the venture capital risk Kohlberg Kravis Roberts (KKR) group and who already belongs to Sotheby's' board of Directors.
Home
