Artprice.com: The Hotel Drouot Affair is not yet Buried…

October 6, 2010

PARIS, October 6, 2010 /PRNewswire-FirstCall/ — The damaging Hotel
Drouot scandal just won’t go away… Vincent Noce, an international art
market specialist who has already attacked the major auction houses
(Christie’s vs Sotheby’s New York) is the author of an article in the French
daily newspaper Liberation entitled “Drouot, embrouilles en vase clos”
(literally “Drouot – monkey-business in a sealed container”). Noce describes
the mess the Hotel Drouot is in and, more generally, the destitution of the
French art market which no-one seems capable of saving from itself. 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 (cf “In the
wake of a damning report on famous Drouot” [sept. 2010]) (
http://web.artprice.com/ami/ami.aspx?id=Mzk3NDg0ODQ1NzQ1Nzk=). Thierry
, 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).

Liberation has obtained copies of three confidential documents that give
very contrasting views on the subject and, above all, expose the confusion
that reigns at government level. Since France’s Bureau for the prevention of
illicit trading in cultural assets descended on the company’s packers, there
is generalised panic in the house.

The Minister for Justice, Michele Alliot-Marie, wants to revive a reform
that was rejected by the French Parliament, after carefully emasculating its
essence (Liberation, 23 July 2009). The investigation which began more than a
year and a half ago is likely to continue for quite some time as the police
interview the organisation’s 110 packers and 70 auctioneers. For the time
being, no-one knows just how far the charges (if any) will go against these
venerable figures who enjoy excellent relations with the magistracy and the
legal profession.

Five months ago a commission delivered its report to the minister, but no
action was taken. On 10 September, the French daily “Les Echos” published
extracts of this report, accompanied by an interview with the Madame
Alliot-Marie, who was clearly doing her best to prevent an explosion of the
affair before Sarkozy’s much announced forthcoming government reshuffle. The
report’s 75 pages constitute a very severe critique of the Drouot

But also, to an even greater extent, of the French authorities who have
never understood “the real economic importance” of an art market or of its
need for modernisation in the face of globalisation stresses. “Outdated
working methods”… “diminishing quality of the goods for sale”: the auction
sales house operates as a “closed shop” with “no strategic vision”. Journal
publisher, auction room owner / renter and service provider, the Drouot
cartel is “an organised conservatism”, which, by negligence, has opened the
door to “malpractice” …/… Copyright Liberation, Vincent Noce, 5/10/2010
00 :00 (see full article on Drouot, embrouilles en vase clos
)). Artprice, in its role as art market observer and analyst, has frequently
highlighted the problems inherent to this sector of the French economy since
the 1950s; problems crystallised by the Parke-Bernet syndrome when Drouot
contemptuously rejected acquisition offers from the largest US auction
company without even looking at the dossier and despite the fact that
Parke-Bernet was owned by a Francophile.

Subsequently, Sotheby’s – with Peter Wilson at the helm – immediately
bought the New York firm Parke-Bernet which was at the time by far America’s
largest auction house. In 1977, Sotheby’s was triumphantly listed on the
stock market. It was only in the 1990s that in great secrecy, the
auctioneer-owners of the Hotel Drouot came close listing the company on the
second marche (Artprice has the IPO prospectus in its archives): what should
have been a great success – equivalent to Sotheby’s IPO on the NYSE – ended
once again with an internal fiasco that scuppered Drouot’s stock market
pretentions. And yet… according the sociologist Alain Quemin, one in three
of France’s authorized auctioneers had a market trader in the family (who,
since the reform, have been integrated into the Compagnie de bourse).

Then in 2000, Artprice’s analysis in great detail of the reform of
Voluntary and Judicial Sales published that year (edited by Serveur
Judiciaire, 1,432 pages) stated unambiguously that the French art market was
heading straight into the wall. Ten years later, the reform has proved to be
an unequivocal failure. France, despite the numerous calls from Brussels for
it to adopt the European Directive on auction sales, has not even reacted to
the latest deadline set by European Commissioner Barnier (24 August 2010).

Henceforward, it’s the European Court of Justice that is will be
responsible for dealing with France’s breach of the Services Directive.
France has already betrayed Europe once with its empty reform of 2000.
Meanwhile, China has definitively taken France’s place in the global auction
revenue ranking.

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

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