Quantcast

In the Wake of a Damning Report on Famous Drouot, Artprice Analyses France’s Collapsing Position in the Art Market

September 13, 2010

PARIS, September 13, 2010 /PRNewswire-FirstCall/ — France’s major
economic newspaper Les Echos reports, in an article by Martine Robert, having
had access to the famous report on the Paris auction place commissioned by
French Minister for Justice after the Savoyards scandal. The 10 September
2010
report highlights the decline and lack of transparency of the 70 auction
houses.

“Organised conservatism”, “minimalist governance”, a “closed statutory
system” and “outdated working methods” without mentioning “the declining
quality of its merchandise” are the damning conclusions of the report
commissioned by French Minister for Justice, Michele Alliot-Marie, to which
Les Echos had access following the scandal which broke in late 2009.

“The conclusions are probably even more damning than expected and the
government wants to give itself time to modernise Drouot”, antique dealer

Herve Aaron recently confided. “Originally an item of news trivia, this is
turning into a matter of State”, added Herve Chayette, Chairman of Symev, the
representative body for public auction companies and auctioneers. “Drouot
needs a complete overhaul. We’re not going to accept the usual suspects on
the pretext that they are now regrouped in a new company!” stated, for his
part, Claude Aguttes.

In 2010, according to Artprice’s econometrics and market research
department, Drouot represents 46.5% of transactions and 23% of auction sales
proceeds for the art market in France. Artprice knows Drouot well following
its attempted acquisition of the Gazette de l’Hotel Drouot in February 2002
(Source: Les Echos #18578, 23 January 2002 – La Tribune, 25 January 2002).

Francine Mariani-Ducray, Chairperson of the Conseil Superieur des Ventes
Volontaires, the art market’s regulatory board, who acted as reporting
counsellor to the Justice Ministry for the Drouot report, believes that
“Drouot must pursue a group strategy and leverage its world-wide reputation
in order to develop internationally.”

According to Les Echos, the French Minister for Justice’s position is
very specific: “In commissioning this report, my aim was clear: to ensure
that, in future, the Drouot group and its 70 member auction houses are
stronger than in the past. The main concern must be the economic situation of
Drouot and its players when faced with increasing international competition,
the emergence of new markets and some fierce, particularly British and
American, operators.” Furthermore, “Drouot is experiencing a crisis which has
made it the subject of legal proceedings on which, given my position, I
cannot comment.”

In the same Les Echos interview, the Minister for Justice stated that
“the draft law debated in the Senate last year should come before the
Assemblee Nationale at the earliest opportunity.” Artprice can only welcome
this governmental commitment to rescuing France’s position in the global art
market where it continues to lose ground.

Within the framework of an official meeting on 27 July 2010, attended by

Francine Mariani-Ducray, Chairperson of the Conseil Superieur des Ventes
Volontaires, the art market’s regulatory equivalent to the SEC for the
financial markets, Thierry Ehrmann, Chairman and Chief Executive Officer of
Artprice, reiterated that, in terms of the art market, France has been
steadily losing ground for the past 30 years with China now safely
established as the global number three (see page 10 of the Artprice 2010 half
year financial report).

Artprice’s Chairman and CEO proffered some figures incontestably showing
that the reform of 10 July 2000 was not beneficial for France due to its lack
of ambition and protectionist nature (Source: Code des ventes volontaires et
judiciaires (Code of Voluntary and Judicial Auction Sales), 1,430 pages,
published by Artprice in 2001). Despite some deceptive figures on the Fine
Art segment, France’s loss of market share is still accelerating in a sector
where job losses now amount to some thousands (Source: Economic report
published by Le Serveur Judiciaire/Artprice 2010).

In addition to the scandal that has sustainably rocked the history of the
Drouot group and its member auction houses, the situation in France is no
better: this year, the French auction houses are again losing market share.
The first firm to appear, Artcurial, only ranks number nine behind Dorotheum,
the Austrian auction house, and far behind the Chinese and British players.
In 2006, there were six French auction houses in the global top thirty but
today there are only three.

However, beyond the Drouot scandal, the complaints lodged by Artprice
before the Autorite de la Concurrence (Competition Authority) against five
Paris auction houses for price fixing have opened up a new legal battlefront.

Artprice confirms having lodged a complaint, before the Autorite de la
Concurrence, against five Paris auction houses for price fixing opposite
3,600 auction houses, who are Artprice’s clients and partners and 7,400
valuers with whom Artprice has been working since 1987 over the world-wide
internet (see the Litigation chapter of Artprice’s 2010 first half financial
report).

According to Artprice, there are unquestionable links, individuals in
common, holdings in share capital and common social mandates, common
management bodies, common public auction sales, internal notes and
declarations of union bodies like the SYMEV, chaired by Herve Chayette,
common minutes on the strategy versus Artprice, prohibited refusals to sell
such as the Gazette de l’Hotel Drouot (owned by the main companies accused)
despite formal notices, similar strategies with serious and concordant
indications of a concert party action and/or long-meditated agreement but
clearly contravening for example, article L.420-1 of the Code of Commerce.
With a little perspective, one might consider, amongst other things, the
Drouot problem to be far from over…

At European level, a number of these auction houses have been very
seriously condemned for such practices. These concert party actions tend to
limit the access to and free exercise of competition, notably by Artprice, on
the electronic public auction market as provided by the European Services
Directive that should have been transposed into local law by 27 December 2009.

Lastly, on 8 July 2010, the Third Chamber (4th Section) of the Paris
Court of First Instance (which, within the framework of its four sections,
exclusively handles intellectual property cases and whose decisions are
considered authoritative on this matter) handed down an important ruling
within the framework of the dispute between Artprice and one of the five
auction sale companies. The ruling of the judges was very clear that the sale
catalogues of the SVV (Voluntary Auction Sale Company) Claude Aguttes are not
protected by copyright. The Third Chamber of the Court accordingly held that
Artprice could not have committed acts of forgery and dismissed the Aguttes
case.

The first section of the same jurisdiction handed down a similar ruling
on 30 March 2010 within the framework of the litigation between Artprice and
SVV Artcurial Briest Poulain F. Tajan (one of the five auction houses suing
Artprice). Again the judges found that the catalogues published by Artcurial
are not protected by copyright and the court dismissed the auction sale
company’s forgery claim against Artprice. This ruling was not appealed and is
thus final.

These legal precedents, involving two major auction houses, strengthen
Artprice’s position within the framework of three similar cases that are
still pending as well as the outcome of the price fixing claim lodged with
the Competition Authorities by Artprice. At the end of July 2010, some
staggering and incontestable new evidence accusing these five auction houses
of price fixing has just been cited in the schedule listing documents relied
in support of the claim lodged with the Autorite de la Concurrence during the
2010 first quarter.

It should be specified that Artprice pays royalties under the terms of
the specific contract concluded with the ADAGP, the French society for
collective management in the visual arts and the largest in the world, which
receives and redistributes copyright fees to visual artists in more than 43
countries. This pioneering agreement (2007) in the digital economy is
regularly cited as exemplary by the different Ministers for Culture in Europe
and particularly in France.

Artprice also confirms that it is the plaintiff, before the most senior
examining magistrate, in a claim against Christie’s for, amongst other
things, infringement of France’s Monetary and Financial Code. In the fullness
of time, this claim turns out to be similar to a Christie’s case against
Artprice in 2001, when Christie’s dropped the claim without any concession
whatsoever from Artprice.

Transposition of the European Electronic Sales Directive into French law
and 2010 outlook

The transposition into local law of the EC Services Directive 2006/123/CE
including the notion of online operators of electronic auctions is perfectly
in accordance with the different government projects and commissions to which
Artprice has already given its support and data.

The European Commission has just singled out France with a substantiated
recommendation, criticizing it for the delay in transposing the Services
Directive and enjoining it to inform the Commission of the legal measures it
plans to take to expedite the transposition of this European Services
Directive into French law. This is the second warning shot from the
department of Michel Barnier, the European Commissioner for the Internal
Market. This Directive, formerly better known as the Bolkenstein Directive,
should have been transposed into local law by 27 December 2009, but there has
been a very serious and unjustified delay in France, heavily penalising
European players such as Artprice.

The Commission considers that the delay in transposing the Directive will
involve significant costs for European companies. France thus had until 24
August 2010
to respond to the Commission. Brussels may now legitimately refer
the case to the European Union Court of Justice, thus initiating the third
stage in the European action for breach procedure. In September, a
legislative calendar involving a political and economic context that is
extremely favourable to Artprice is thus being established by the Commission
injunction in which France had until 24 August 2010 to comply with the latter.

Lastly, the adoption by the 27 Member States of the European Union of the
Treaty of Lisbon that came into force on 1 December 2009 considerably
strengthens Artprice’s legal and judicial position in defending itself
against an ultra-minority camp that is witnessing the collapse of its
Franco-French monopoly. It should be specified that the majority of French
auction houses and valuers (94.5%) have worked with Artprice since 1987.

Artprice proposes to reinstate France as a leader of the global art market

As a result of the global economic and financial crisis, nearly all the
auction houses and valuers around the world are moving closer to Artprice,
which has been working in close collaboration with them since 1987, in order
to produce their auction catalogues formatted by the Artprice standardised
data and, as soon as the Services Directive is adopted, organise online
auctions through Artprice’s standardised market place and its 1.3 million
members.

In addition to its market place, Artprice owns the largest Fine Art
client portfolio in the world. For the art market, these client behaviour
databases constitute the basis for the success of catalogued auction sales
with information dating back to the origins of art auction sales in Europe in
the early nineteenth century.

The standardised market place model has now been tried, tested and
validated by the Art market particularly during a period of major crisis. The
figures speak for themselves: according to the 2005 activity report from the
Conseil Superieur des Ventes Volontaires “the Artprice offer amounted to EUR
1.3 billion
of works of art”. In 2006, the offer stood at EUR 2.7 billion of
works of art before rising to EUR 4.32 billion in 2007 and EUR 5.4 billion in
2008. For 2009, Artprice confirms recording a volume of around EUR 5.85
billion
of works of art with an estimated sale rate of around a third on
which Artprice does not yet receive a commission. In 2010, Artprice expects
growth of between 18% and 20%.

With the context of globalisation, Artprice is in a leading position in
that it has all the assets needed to offer the auction houses and valuers the
optimal conditions for integral online migration by accelerating their sales
and reducing buyer/seller costs (between 36% and 37.5% according to the
Conseil Superieur des Ventes Volontaires). Artprice is thus ready for online
auction sales in accordance with the European Directives (2006/123/CE on
services voted 12 December 2006) on liberalising auctions in Europe and
adopted by the Senate on 28 October 2009.

Similarly, the Conseil Superieur des Ventes Volontaires, the regulatory
authority for the auction sales market, notes that “French auction houses
have not followed the online sales process proportionally to the explosion in
the global internet”, which also supports Artprice in its vocation to be the
reference online auction sales platform for the 3,600 auction houses
worldwide (including, of course, the 378 French auction houses) and the 7,400
valuers with whom Artprice has been working over the internet since 1987.

In August 2010, within the framework of specific agreements, more than
77.4% of the PDF catalogues and/or data of 3,600 international auction houses
were sent to Artprice on its Secure Intranet.

This reflects, better than any other demonstration, the trust and
confidence that characterises Artprice’s relations with auction houses.
Likewise, thanks to Artprice’s database on valuers (a large number of whom
organise auctions themselves) there are no fewer than 7,400 key art market
players that Artprice is gradually connecting to its standardised marketplace
(SMP) with intellectual property rights protection (sui generis and copyright
law).

This explains Artprice’s presence in most of the printed and online
auction sales catalogues of the auctioneers and auction houses, in which each
artist and work of art now has a unique reference coming from the Artprice
databases.

In conclusion, the expediting by French Minister for Justice of the
adoption of the European Directive by the Assemblee Nationale is excellent
news when it comes to defending the common interests of both Artprice and
French auction houses in the art market.

Source: http://www.artprice.com (c)1987-2010 thierry Ehrmann

    Discover the universe and future of Artprice:

http://web.artprice.com/video/

Or contact Artprice for a DVD to be sent to you free of charge.

Artprice is the world leader in art market information with over 27
million auction prices and indices covering over 405,000 artists. Artprice
Images(R) offers unlimited access to the largest database of art market
information in the world, a library of 108,000,000 images and engravings of
art works from 1700 to the present day. Artprice continuously updates its
databases with information from 3,600 international auction houses and
provides daily information on art market trends to the main financial press
agencies and to 6,300 press titles worldwide. Artprice offers standardised
adverts to its 1,300,000 members (member log in) and is the world’s leading
market place for buying and selling works of art (source: Artprice).

Artprice is listed on Eurolist by Euronext Paris: Euroclear: 7478 -
Bloomberg: PRC – Reuters: ARTF

Contact: Josette Mey – tel: +33-(0)478-220-000, e-mail: ir@artprice.com

SOURCE Artprice.com


Source: newswire



comments powered by Disqus