To wage his new legal battle with Sotheby's and Christie's, Black has hired Christopher Lovell, a formidable antitrust attorney who in 1997 won a record $1.027 billion settlement in a price-fixing case related to the nasdaq market. "The highest evil in the pantheon of evils is price-fixing, according to the antitrust courts," Lovell explains. "And so far, the defendants have conspicuously failed to deny the allegations."

Leading the Department of Justice's case is John J. Greene, a Brooklyn-born antitrust prosecutor whose past courtroom triumphs include a 1991 conviction of Manischewitz, the celebrated Jersey City baker accused of fixing the price on about $25 million of kosher-for-Passover matzo between 1981 and 1986.

Beginning in 1997, Greene was also behind an investigation of a dozen or so leading private art dealers accused of "ring" bidding -- an ingenious scheme for swindling sellers and auction houses whereby a circle of dealers agree not to bid against one another in the auction room so that the cheaply traded object can be sold afterward in a higher-stakes private auction among themselves. Although many dealers were investigated in a flurry of subpoenas and legal fees three years ago, the case appears to have fallen by the wayside as Greene takes on the infinitely higher-profile, bigger-stakes auction-house case.

"You didn't hear this from me," says a well-known SoHo contemporary-art dealer who is a veteran of the byzantine wars of the art world. "But when the Justice Department was investigating the dealers three years ago, how do you think they got the idea of looking into the auction houses? You don't have to be a genius to figure out that it began with a few vindictive dealers pointing the finger at Sotheby's and Christie's."

As the auctioneers struggle to put their houses in order, the art market they have labored to control for so long is rapidly changing. As purveyors of luxury goods, both firms are stymied by a dwindling supply of exceptional objects coming to market as the soaring Dow erodes owners' motivation to sell. Simultaneously, the two firms face the challenge of that great democratizer: the Internet.

"How do you think the Feds got the idea of looking into the auction houses?" asks a SoHo dealer. "A few vindictive dealers pointing the finger at Sotheby's and Christie's."

Before the eighties, the vast majority of buyers at Sotheby's and Christie's were sharp-eyed dealers cheaply snapping up the heirlooms of toffs desperate to raise quick cash to handle the indignities of death, divorce, and debt.

When Alfred Taubman bought Sotheby's in 1983, he quickly recognized the vast profits to be made by selling to collectors directly. Drawing upon his expertise as a mall mogul, he perfected the practice of turning auction houses into luxurious retail establishments, with educational programs to instill confidence, lavish receptions to lure the socially intrepid, and controversial multi-million-dollar loans to encourage astronomical bids. Ingenious as a business strategy, the plan inevitably enraged dealers, who saw their profits steadily eroded.

Dealers' fury has only intensified during the past decade, as Sotheby's and Christie's have swallowed up even more of their territory by acting as dealers themselves, privately selling to a well-cultivated global network of clients works of art that do not come up at auction.

Since the scandal broke, the overriding mood at big-ticket art-world events in New York has been a mix of exultation, rage, and bewilderment. As hundreds of collectors and dealers mingle at the Art Show at the Park Avenue armory and the so-called Armory show held at the Javits Center two weekends ago, speculation about the fate of Sotheby's and Christie's is on everyone's lips.

"I guess you could call it sweet revenge," says a well-known Fifth Avenue dealer at the Javits Center, darting nervous glances from side to side to ensure no auction-house employees are within earshot. "It's always been a weird relationship between the dealers and the auction houses," she adds. "We need them, so we can't afford to appear too gleeful. Okay, they have mud on their faces. But they're still the biggest game in town."

Uptown at the Armory, 57th Street contemporary-art dealer Joseph Helman seems altogether upbeat, predicting that the current brouhaha will break up the duopoly long held by the two leading auction firms, to everyone's advantage.

"It's a natural evolution," he says brightly. "It's not so different from the situation with Microsoft, or the breakup of the phone company. The auction business is changing, like every other business. Ultimately, I think it will make the market stronger."

But while some express unmitigated glee at seeing the powerful auction houses' reputations in tatters, others speak of shock at the devastating turn of events for Al Taubman and Dede Brooks.