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. Last Updated: 07/27/2016

Phillips, Not Feds, Scaring Art Titans

NEW YORK -- Christie's and Sotheby's, the big guns of the high-stakes art auction world, launch their annual spring sales this week under a cloud of scandal and with a third player nipping at their heels.

While executives at both houses, as well as a more visible third player, Phillips, agree that a federal investigation and charges looming against Christie's and Sotheby's over price fixing is a major concern, it has not had a big impact on their annual spring sales.

Sotheby's is being sued for allegedly conspiring with British rival Christie's International PLC to fix sales commissions.

Dozens of civil suits have been filed by buyers and sellers of art, who allege they were overcharged.

The fee-fixing scandal broke in January amid reports that Christie's was cooperating with federal investigators and led to the resignation of Sotheby's chairman Alfred Taubman as well as Diana "Dede" Brooks, its chief executive and the onetime doyenne of the exalted business of selling art.

Coming "when we were gathering property for the sales," the scandal "certainly wasn't perfect timing," said David Norman, Sotheby's head of impressionism and modern art.

"Everyone talked about it, [but] except for one instance when someone decided not to sell because of the investigation, it just hasn't knocked any buyers out," he said.

Sotheby's estimates its sales of Impressionist and modern art, including a piece from Monet's famous waterlilies series and a Picasso still life, will bring in $149 million to $206 million, which is 15 percent to 20 percent less than Christie's predictions of $177 million to $236 million.

Some reports have speculated that Christie's cooperation with the authorities might have damaged client confidence in Sotheby's, but executives at both houses, as well as other art world professionals, were reluctant to affirm that.

"In terms of interest from buyers, there has been no difference whatsoever from past seasons," said Franck Giraud, the head of Christie's 19th- and 20th-century art departments.

"Collectors look at art and the prices attached and that's what's important to them."

Madison Avenue art dealer Richard Feigen agreed. "It's a matter of conjecture as to whether the Justice Department's investigation is affecting these sales," he said. "I would tend to think the supply is thin, and that the investigation really doesn't affect people."

Sotheby's Norman concurred. "We're in a market where good quality paintings seem to be increasingly hard to find. There's not much new," he said.

Norman thinks the two auction houses' estimates, which he said "were not very far apart," could have been reversed had a $25 million to $30 million Picasso gone to Sotheby's rather than Christie's.

Whatever numbers result for the two art world titans, it is Phillips that may forever change the outlook for future sales.

The No. 3 auction house, which was bought by luxury-goods group Moet Hennessy Louis Vuitton, or LVMH, in November, figures on a $100 million spring sale - roughly 50 times its $2 million take last fall, according to international executive director Dan Klein.

Its top painting alone, Kazimir Malevich's circa 1919 work "Suprematist Composition," is expected to fetch $20 million.

LVMH "is spending a lot of money trying to buy their way into the first tier," said dealer Feigen.

"It sounds like they're making big guarantees, and are obviously prepared to spend a lot of money," he added.

Sotheby's and Christie's concede they lost some clients to Phillips. "Neither of us would give such high guarantees [as Phillips]," said Sotheby's Norman, adding that naturally some consignors would go where top dollars were dangled.

"But I don't think that's going to be a lasting approach."