Picasso Marks Sotheby's Comeback

N EW   Y O R K, May 8, 2004 -- History was made in a packed sales room in Sotheby's auction house when Pablo Picasso's Boy with a Pipe sold for more than $104 million — the highest amount ever paid for a single piece of art in an auction setting.

For Sotheby's, the record sale Wednesday marked something of a comeback. In January 2000, the U.S. government accused the American-owned auction house with conspiring with its longtime rival, British-owned Christie's, to fix commission rates. They agreed to pay $512 million to settle the charges.

In his new book, The Art of the Steal, in bookstores this week, Christopher Mason examines the scandal that threatened to topple two exclusive auction houses — centuries-old shopping malls for the rich and famous.

"You're talking about the most intimate part, the most private part of your business that you're sharing with your competitor. It's a shocking idea," Mason told ABCNEWS.

Authorities estimate that during the 1990s, Christie's and Sotheby's may have cheated their wealthy customers out of $400 million.

Profit and Power

Mason says the houses apparently had drawn up a secret agreement in 1995, calling for both sides to raise the fee they charged sellers from a flat 10 percent to a sliding scale of 2 percent to 20 percent, depending on the price of the object.

At the time, the two houses controlled more than 90 percent of the world's $5 billion high-end art market. Everything from Van Gogh masterpieces to Princess Diana's evening gowns to Eric Clapton's guitars were theirs for the selling. They were a virtual duopoly. So why fix prices?

Mason says the auction houses were motivated by a desire to boost profits at a time when sales were reeling from the economic crisis in Asia.

In addition to the need to survive, Mason says, the leaders of the exclusive auction houses were motivated by ambition.