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For some time now, the rarefied high end of the art market has been dominated by two major auction houses - Sotheby’s and Christie’s. Time-honoured companies, seemingly run with British reserve and gentlemanliness, they remain a prestigious way to buy and sell old (or new) art. Still retaining the majority of the market share, there are nevertheless, a series of factors that threaten their existence.

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Since the 1980s they have both been rocked by a series of scandals involving price-fixing and guarantees. The image of Sotheby’s or Christie’s being run by art-loving, British gentlemen pretending to be businessmen (or businessmen pretending to be gentlemen) has largely evaporated.

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Nevertheless, the two major auction houses retain the majority of the market share, at least as far as fine art in concerned. The question is how they will look in the future? Another factor threatening the two leaders hegemony is the rise of rival auction houses whose aim is to poach as much of the leading two houses’ businesses as possible. The chairman of the world’s largest luxury conglomerate, (LVMH Moët Hennessy Louis Vuitton), recently moved on from the selling of just perfume, luggage and champagne and muscled into the auction world with the acquisition and conglomeration of Phillips and de Pury & Luxembourg. The new auction house Phillips de Pury & Company made sure it was noticed, especially in the U.S.A. by spending lavishly to attract the best talent and most fabulous paintings. And yet in 2001, Bonhams took over and rebranded the U.K. operations of Phillips and gained full independence after buying back a 49.9 % stake held by LVMH. It then bought out Goodmans (Sydney) and operates in Sydney as Bonhams & Goodmans making it the third largest auctioneer after Sotheby’s and Christie’s.

The pressures for market dominance is being felt everywhere– Christie’s is closing its Australian operations after four decades in the business. Neither Phillips or Bonhams can be held entirely to blame for this development. Rather, a relatively new Australian upstart – Deutscher~Menzies, has aggressively pursued the art dollar.

Threatening the existence of all the traditional auction houses is the spectacular rise of online auctions, spearheaded by companies such as ebay.com and amazon.com. Their steady march into the world of art has meant the dispersal of sales globally and created new challenges for the auction houses.

What are the ways that auction houses compete with each other to obtain that valuable consignment? How have they changed in the face of takeover bids and conglomerations? What competition does Sotheby’s and Christie’s face as other luxury brands try to muscle in on the action? How do the traditional players in this scene compete with the new web-based auction services? Is there still room for gentlemen (or women) in the 21st Century auction house?

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John Brack’s The Bar, 1954
- sold for a record $3.12 million (Australian), April 11th, 2006. Sotheby’s (Melbourne).

A preliminary URLography

http://search.sothebys.com/
Sotheby’s general website.
http://www.christies.com/home_page
Christie’s general website.
http://www.deutschermenzies.com.au/
Deutscher-Menzies general website.
http://en.wikipedia.org/wiki/Bonhams
Bonhams info.
http://www.bonhams.com/
Bonhams general website.
http://www.forbes.com/2001/11/12/1112trial.html
“At trial, Taubman Will Deny Wrongdoing”.
http://www.forbes.com/2001/11/14/1114connguide.html
“Which Auction House is Right for You?”
http://www.forbes.com/2001/11/14/1114timeline.html
“Time Line: The Rise of Christie’s and Sotheby’s”
http://www.forbes.com/2001/11/14/1114players.html
“Who’s Who in The Sotheby’s Price-Fixing Trial?”
http://www.forbes.com/2001/11/14/1114hot.html
“The Auction Business Waits for the Hammer to fall.”
Anna Rohleder, Forbes.com
http://www.abc.net.au/am/content/2006/s1611610.htm
“Christie’s to close Australian operations”.
Brigid Glanville, ABC Local Radion
http://www.stateart.com.au/sota/news/default.asp?fid=4052
“Christie’s Australia reverts to representative office.”
http://www.businessweek.com/1999/99_22/b3631001.htm
eBay vs. Amazon.com; Fixed prices or dynamic pricing? Whichever wins biggest will shape the future.
http://www.artnet.com/Magazine/features/finch3/finch9-10-03.asp
Charlie Finch - "Reforming the Auction Market."
http://www.thecityreview.com/auctions.html
Carter B. Horsley "Auction Angst: The Anti-Trust Investigations are Looking at Fee-fixing, but what about Reserves, Estimates, Guarantees and Post-Auction Sales."

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