Ex-Sotheby’s Chief Testifies Boss Instigated Price-Fixing Scheme

Former Sotheby’s chief executive Diana D. Brooks testified Monday against her former boss, A. Alfred Taubman, saying he told her to work with rival Christie’s to fix prices at the world’s two largest auction houses.

During the six-year period of the alleged scheme, the two houses charged sellers in the U.S. at least $400 million in commissions they declared nonnegotiable.

Brooks, who stepped down as president and chief executive of Sotheby’s in February 2000, told a Manhattan federal court she set the nonnegotiable fees with then-Christie’s chief executive Christopher M. Davidge in a series of meetings starting in 1993. She said she met him in various locations in New York and London, including a parking lot at New York’s John F. Kennedy International Airport.

Brooks said the clandestine talks with Davidge followed a private April 1993 meeting at the Sotheby’s London office where Taubman, a powerful figure in the art world, told Brooks he had talked to Christie’s then-Chairman Anthony J. Tennant about joint steps to shore up profits in a weak market.

Taubman, 76, a Detroit real estate magnate who is Sotheby’s Holdings Inc.’s controlling shareholder, was indicted in May with Tennant for allegedly masterminding price-fixing from 1993 to 1999. He has said he is innocent.

Brooks said Taubman in April 1993 showed her a small piece of paper on which he wrote topics he discussed with Tennant including pricing, guarantees the firms offered sellers and interest-free loans. Taubman then told Brooks to contact Davidge to work out the details, she said.

“He said he and Tennant had gotten along very well and he could see them working well together,” Brooks said. The men allegedly joined forces to combat a weak market where auction houses cut fees charged to sellers in desperate bids for business, she told the court.

“It was a time of a lot of giveaways to get business,” Brooks said.

Brooks and Davidge also agreed in a string of private meetings that the houses would stop bad-mouthing each other, stop trumpeting their market share gains, end interest-free loans and stop poaching each others’ employees, Brooks said.

At one point, Taubman asked her why she didn’t work with Davidge on estimating the value of pieces, to stop the houses from raising estimates to win business, but she said no.

Brooks learned of the government probe into price-fixing allegations in April 1997 but said at a meeting with in-house lawyers she failed to reveal her covert meetings with Davidge.

Brooks said she got her own lawyer in January 2000 and decided to tell everything she knew when she learned Christie’s had ended a joint defense agreement with Sotheby’s.

Around this time, Brooks said, Taubman pulled out a copy of the Financial Times newspaper with Brooks’ photo splashed across the front page and said: “You’ll look good in stripes.”

Taubman’s lawyers say if there was collusion, it was done by others.

They blame Brooks, who pleaded guilty to her role in the alleged scheme, for engineering it as a way to boost her own compensation. Taubman’s lawyers allege Brooks agreed to testify to avoid a three-year prison term. She made a plea bargain with prosecutors at her trial and has not been sentenced yet.

Brooks told the jury Monday there is no guarantee in her plea bargain that she will not go to prison.

Davidge testified against Taubman last week, admitting that he lied to Christie’s board of directors and lawyers to hide the price-fixing arrangement at the world’s two top auction houses.

If Taubman is convicted, he could face up to three years in prison. The one antitrust charge against him also carries a possible $350,000 fine that can be increased based on the loss suffered by the victims.

Tennant, 70, a British citizen, has said he plans to remain in Britain and will not face trial in the United States.

Sotheby’s also pleaded guilty to an antitrust charge and agreed to pay a $45-million fine.