Prix Fixe?

“I’m impressed Al has the courage to show his face,” says a wealthy Fifth Avenue collector, glancing in awe at A. Alfred Taubman, the embattled former Sotheby’s chairman. “In his position, I’d be home, not answering the phone.”

As guests savor the lobster and caviar canapés at Sotheby’s elegant York Avenue boardroom on February 29, the atmosphere is eerily reminiscent of twilight cocktails aboard the Titanic. The party is being hosted by the former chairman’s wife, Judy Taubman, to introduce a cluster of 40 or so chicly dressed New York philanthropists to her new friends the Duke and Duchess of Northumberland, who are seeking to rustle up $25 million to build a public garden on the grounds of their castle in England. But the price-fixing scandal that’s roiled the auction world since late January casts a formidable shadow.

Chatting with Veronica Hearst, Taubman shies away when snapped by a photographer who turns out to be shooting for Vogue. “Don’t worry,” the dark-lipped socialite reassures her imperiled friend. “I’m a Hearst. They’ll never print it.”

The room is rife with tension, punctuated by a relentless exchange of air kisses and handshakes. Into this social swirl, a hapless photographer rushes to capture the spectacle of Taubman’s radiant blonde wife embracing the dignified Princess Mimi Romanoff and collides with a waiter. The crash sends a tray full of sticky sour-apple cocktails hurtling toward the 75-year-old Taubman. In a flash, there is fragrant sour-apple cocktail dripping from the left leg and elbow of his otherwise immaculate dark-blue suit.

A nervous public-relations aide proffers a tiny paper napkin to mop up the spreading mess.

“If you break the law, you have to pay, you know what I mean?” says Herbert Black, a multi-millionaire furniture collector who’s suing both houses.

“It won’t help,” Taubman says indignantly.

Just two months ago, few could have predicted Taubman’s current humiliations. Sotheby’s and Christie’s, those rarefied clearinghouses of precious objects and frequent hosts to the civilized world’s most discerning collectors, have until now enjoyed a virtual duopoly, with a combined 90 percent of the world’s fine-art auction business, generating near-record hammer sales last year of $2.3 billion apiece. To signal their high hopes for the future of the auction business in these boom times, both firms recently expanded into vast new Manhattan headquarters that reflect not only their preeminence in the art world but their efforts to redefine themselves in the dawning age of Internet commerce.

But now the two archrivals are embroiled in the most explosive scandal of the auction houses’ entwined 200-year history. And Taubman has good cause to shun the press he once courted. Both firms face a slew of potentially crippling civil lawsuits stemming from an ongoing investigation by the Department of Justice into whether they illegally colluded in 1992 and 1995 to fix virtually identical commission rates. In light of these events, the firms’ stupendous new premises may have been built on illegally gained profits. On January 28, Christie’s sent shock waves through the art world by revealing it had turned over evidence to the Justice Department in connection with its antitrust investigation. In alerting the world to this whiff of malfeasance, Christie’s deftly pointed out that the “possible conduct” had taken place prior to its current ownership by French luxury-goods magnate François Pinault (who bought the company for $1.19 billion in 1998). In a coup de grâce, Christie’s added that the firm had been granted conditional amnesty by the Feds.

With disturbing new reports of documents allegedly implicating Taubman in an illegal scheme, he and Sotheby’s widely respected former chief executive Diana D. Brooks (both of whom stepped down from their posts on February 21) could face the horrifying prospect of going to jail for up to three years.

This is hardly the way Taubman imagined his $38.5 million white-knight investment in Sotheby’s would turn out. Because Sotheby’s and Christie’s have always attracted persons of wealth and social standing as clients and patrons, they have also always attracted employees and owners eager to join these exalted circles. Taubman, a Detroit-born businessman with a reputation for commercial genius, was no exception.

In 1983, fresh from a California real-estate deal that transformed him from a wealthy detail-oriented developer of innovative shopping malls into a truly rich international investor, Taubman was enlisted by David Metcalfe, a jet-set figure with close ties to the British royal family, as the man to save Sotheby’s from a pair of eighties-style leveraged raiders.

Though the acquisition elevated Taubman from a relatively unknown figure to a staple of the society pages, he wasted no time in turning the snobbish auction house from an insular upper-class institution into a service-obsessed marketing machine. In his first speech to employees, Taubman informed the shabbily genteel staff that he had been snubbed by them numerous times in his previous dealings with Sotheby’s as an art buyer. And he made it clear that he would no longer tolerate such condescension.

Born into a prosperous family, Taubman often said he could never shake the uncanny feeling that someday he might lose his fortune, as his father, a farmer and aspiring builder, had done during the Depression. The loss of his family’s money, combined with a penchant for commercial innovation and social adventure, created in him a powerful personal drive. He once described the acquisition of Sotheby’s as “buying the throne.” Both he and his striking Israeli-born wife – who once worked the front desk at Christie’s, a job noted more for the opportunities to meet a husband with deep pockets than to launch a career – relished their roles as king and queen of Sotheby’s.

Notably absent from the Taubmans’ late-February gathering is the dynamic and socially luminous former Sotheby’s boss Dede Brooks. “Dede and Alfred haven’t had a conversation in a month,” reveals a source intimately acquainted with their peregrinations. “They’re not allowed to talk to each other. Only through lawyers.”

This is a far cry from the hard-charging years when Taubman prized the kind of creativity Brooks exhibited as she leaped at new opportunities for the ossified Sotheby’s, like creating the controversial but lucrative service of financing customers’ purchases.

For the 49-year-old Dede Brooks, the situation can be nothing short of devastating. A brilliant financial whiz who joined the firm in 1979, she was until recently the most powerful woman in the art world, virtually indistinguishable from the auction house she helped steer from a snobbish, hidebound relic to an aggressive global brand. “Dede’s obsessed by Sotheby’s,” one woman who has worked at both houses says. “It’s her life. It’s really got to be a terrible blow.”

“Dede’s so smart,” another former colleague observes. “I can’t imagine she’d do anything so stupid.”

At the same time she abruptly resigned from Sotheby’s, Brooks also stepped down from the prestigious board of Morgan Stanley Dean Witter, where she had served for three years. Also since resigning from her job at Sotheby’s, Brooks has put her Greenwich, Connecticut, house up for sale, asking $4 million for the 7,262-square-foot Colonial she and her husband, Michael C. Brooks, a partner in the venture-capital firm J.H. Whitney, purchased for $1.5 million in 1991. A company loyalist through and through, Brooks is selling it through Sotheby’s International Realty.

In light of her current predicament, a story on the house due to run in the May issue of Architectural Digest was indefinitely postponed.

Throughout the art world, there remains a genuine sense of shock that Dede Brooks is no longer at the helm at Sotheby’s. “I have the highest regard for that woman,” says one prominent dealer. “And I haven’t found anyone in this backbiting world to say anything seriously against her. Okay, she’s a businesswoman and extremely tough. But that’s to be expected.”

The incriminating evidence that caused this turmoil, Christie’s indicated, had come from Christopher Davidge, the firm’s British-born former chief executive, whose sudden departure after 34 years was announced on Christmas Eve in a terse internal e-mail sent to the company’s 2,200 employees worldwide. Distancing itself from any skulduggery, the company issued a statement claiming it had only “recently become aware” of the evidence and that it had “immediately disclosed that information to the government.”

High-minded as that sounded, the question has inevitably arisen in the art world whether Christie’s disclosure to the Justice Department was calculated as a brilliant, if cutthroat, attempt to destroy its longtime rival, Sotheby’s. Antitrust investigations are notoriously difficult to prove, and after three years of probing, the government’s case seemed at a virtual standstill until the firm’s dramatic January announcement.

Another theory propounded by a Christie’s insider locates the blame in the troubled relationship between Davidge and Pinault. According to those who worked with him, Davidge was “this working-class guy who’d worked his way, through the dirty end of the business, to suddenly become Mr. La-di-da, I’m-Mr.-Head-of-Christie’s.”

Davidge, the employee continues, “whipped Christie’s into shape and could take credit for the fact that it suddenly had a greater volume of business than Sotheby’s. I have a feeling he did this as a fuck-you to Pinault. They had a terrible, terrible relationship because Pinault took over his company.”

So this version of events gives Davidge the final rebellious gesture to the man who bought his company: “It wasn’t his, but he was running it. And after all, he was very, very self-aggrandizing.”

It’s widely discussed in the London art world that the evidence supplied by Davidge last year in exchange for immunity from prosecution is a memo written to him by Sir Anthony Tennant, an old Etonian who exudes the patrician air of an admiral, who served as Christie’s chairman from 1993 to 1996. That document is said to outline a telephone conversation that took place in the mid-nineties between Sir Anthony and Alfred Taubman, during which the two men debated the commissions charged by the two firms. Sources reported to have read the memo say that it could be interpreted as a price-fixing agreement.

David Price, Davidge’s London-based lawyer, however, insists that his client’s abrupt departure from Christie’s was not prompted by the antitrust investigation or by a dispute with François Pinault. And spokesmen for Christie’s, Taubman, and Morgan Stanley (where Sir Anthony currently serves as a senior adviser) declined to comment on the memo’s existence.

Nevertheless, the blow to Sotheby’s and Taubman has been considerable. From a high of $47 last year, the firm’s shares plummeted two weeks ago to a meager $14.50 on February 22, effectively erasing some $1.3 billion of the firm’s market value and essentially putting the company in play. Reports that cash-rich upstart eBay was negotiating to buy Sotheby’s pushed the price up on March 1, but eBay promptly denied it was interested.

Christie’s, meanwhile, is hardly off the legal hook. Following the initial thunderclap of revelations, a succession of class-action civil suits – three dozen so far – has been filed against Sotheby’s and Christie’s by clients enraged to hear that they may have been overcharged by tens of millions of dollars in commissions inflated by an illegal price-fixing scheme. If successful, the litigants could recover their losses threefold. The first lawsuit was filed on January 31 by Herbert Black, a maverick Canadian multi-millionaire scrap dealer who owns what is known as an “important” collection of Georgian furniture.

“If you break the law, you have to pay, you know what I mean?” Black says, calling on a cell phone from his car in Quebec. “They’re not higher and above the law.” Black clearly relishes the notoriety his lawsuit may bring him. “You’ve talked to people – what’s their attitude to Mr. Black?” he asks cheerfully. “Is Mr. Black a scumbag for doing that? … Okay, I might have lost a few friends and made a few enemies; so be it.”

The current imbroglio is not Herbert Black’s first war with Sotheby’s. In 1994, he bought a pair of George III chairs at the firm’s London salesroom for a record £851,000. Soon afterward, Black was understandably chagrined to discover that the chairs were worthless fakes, made in 1990 by deft miscreants who have since gone to jail. Sotheby’s promptly fired the London experts who had failed to spot the fakers’ handiwork and has since reached a settlement with Black, who insists that his latest suit is not motivated by revenge.

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.

“I’m no fan of the auction houses,” admits a Chelsea contemporary-art dealer. “But this situation only proves how screwed up the American justice system’s amnesty policy is. How inequitable is it that if two people trespass some law in a way that basically doesn’t hurt anybody and one provides the dirt to the Feds, the snitch gets to go scot-free while the other gets taken to the cleaners? It’s Monica Lewinsky revisited, only Christie’s gets to play Linda Tripp and this John Greene guy gets to swagger about like he’s Ken Starr. And no one’s even getting a blow job out of this.”

Yet others seem downright blasé about the matter. “So many immoral things take place in the art world,” a former Impressionism expert at Sotheby’s complains, “like dealers who unscrupulously take advantage of a novice buyer by convincing them to buy a third-rate piece at a top price.” Price-fixing just doesn’t seem to measure up.

Opinion in the art world seems universally supportive of Dede Brooks and mindful of her strong character. And the new chairman of Sotheby’s, former Columbia University president Michael Sovern, confirms that she is repaying that confidence with loyalty to the firm. “She has not been involved in making decisions,” he points out. “But she has been speaking to clients and urging them to remain loyal to Sotheby’s.”

If Sotheby’s and Christie’s did indeed collude in 1992 and 1995, it was perhaps not out of greed but out of terror. During the record highs of the Impressionist sales in summer 1990, gasps of amazement filled New York auction rooms when a Japanese paper mogul, Ryoei Saito, paid $82.5 million for Van Gogh’s portrait of Dr. Gachet and $78.1 million for Renoir’s Au Moulin de la Galette at Sotheby’s, where hammer sales for the year reached a still-unsurpassed $2.4 billion. Stalled by the economic doldrums that followed the Gulf War in 1991, however, revenues at both firms plunged a staggering 50 percent, prompting multiple staff layoffs and a seemingly unshakable aura of gloom. While the houses slogged through the art-market recession of 1991-96, income at Sotheby’s and Christie’s sank perilously low as the auction houses competed for major consignments by slashing the official 10 percent seller’s commissions to zero, effectively wiping out profits.

In 1992, starved for income and mindful of restless stockholders, Sotheby’s announced it was raising its 10 percent premium to 15 percent for the first $50,000. Seven weeks later, Christie’s followed suit. “In the end, we really had no choice,” Christopher Davidge told the New York Times that December. “Internally, we really were hoping we wouldn’t have to raise the buyer’s premium at all, but in the end, we felt it was important to be competing with Sotheby’s on a level playing field.” Given the grim economic climate, few questioned the motivation or wisdom of the matching price hike.

Although income was somewhat buoyed as a result, profits remained dauntingly low at Sotheby’s and Christie’s. In an effort to dig his house out of its hole, Al Taubman made Dede Brooks Sotheby’s chief executive in 1994, having been impressed with her financial acumen and tenacity. No less ambitious, Christopher Davidge had recently ascended to the rival position at Christie’s, and both set out aggressively to attract business.

Davidge, truculent and often at odds with Christie’s board members, made no pretense of his determination to beat Sotheby’s, whose successes Christie’s had trailed for 40 years. Irreverently known as the Golden Hamster for his stout build and meticulous grooming, he was a highly effective but unlikely leader for the London-based auction house, still known for its ranks of Old Etonians with impeccable connections to cash-strapped aristocrats eager to sell off heirlooms. Raised in London, where his grandfather, father, and mother toiled at Christie’s in clerical jobs, Davidge rose from the decidedly unglamorous catalogue-printing side of the business, determined to make his mark at the very institution where his parents could never rise beyond their lower-middle-class status.

“He was definitely from the wrong side of the tracks,” a former colleague remembers. “You could tell by his accent and by his mane of white hair that was all swept back. It looked like he’d spent an hour every morning under the blow-dryer.”

Since his departure from Christie’s, Davidge, 54, has been vacationing in India with Amrita Jhaveri, 29, an expert in Christie’s Asian-artifacts department, whom he has been dating since 1998. Rumored to have received a multi-million-dollar severance package, he is also said to still be negotiating with the Justice Department for personal amnesty in exchange for past and future cooperation.

Brooks, meanwhile, grew up in Laurel Hollow, on Long Island’s North Shore, where her father, Martin Dwyer Jr., a Yale-educated lawyer turned businessman, urged her to compete with her two older brothers. Outgoing and athletic, she attended the legendary all-girls Miss Porter’s school in Farmington – also the alma mater of Jacqueline Bouvier Kennedy Onassis, whose bric-a-brac she would personally auction off in 1996 for an astounding $34.5 million. A superb student, she also went to Yale, where she remains a board member. Brooks generated considerable respect at Sotheby’s despite a reputation for toughness. “I thought the world of her,” says Christopher Gow, a former nineteenth-century-sculpture specialist at the firm. “She shot from the hip, but most of the staff liked her because she knew everyone’s names and fought with the board to get us salary raises. Al Taubman adored her.”

Initially, at least. As Brooks gained confidence and power, their strong, and notably different, personalities began to chafe. “Al and Dede used to be very close,” recalls one Sotheby’s insider. “Then she really started resenting having someone to report to – and he’s not easy to report to – so she did a lot of things he wasn’t happy about. But his view was that you can’t take her power away. She took total advantage, and got free rein because she was making money for the stockholders. Over time, she kept him out of the business.”

As competition between Sotheby’s and Christie’s grew fiercer, the practice of eliminating the seller’s commission in order to win business spiraled into a pattern of increasingly extravagant inducements. Cajoled over boardroom banquets and Upper East Side dinners given by prominent socialites paid by Christie’s and Sotheby’s to drum up business, prospective sellers were enticed with offers of free cataloguing, insurance, shipping, or world tours of their collections, all at the auction houses’ expense.

Something, clearly, had to give. On March 10, 1995, Christie’s announced the introduction of a nonnegotiable sliding scale of seller’s commissions, ranging from 2 to 10 percent, based on the value of each consignment. Five weeks later, on April 14, Sotheby’s matched Christie’s scheme precisely.

Many close to Taubman seem genuinely flabbergasted that he could have been involved in an illegal scheme. “Alfred is honorable to a fault,” says a former Sotheby’s expert. “He’s so honest and aboveboard, I find it impossible to believe he’d knowingly do anything illegal. It’s just not in his character.”

Aside from some astonishment that Sotheby’s, traditionally the more aggressive firm, appeared to be taking its lead from Christie’s, few expressed surprise at the identical fees. “Obviously, it was in both our interests to charge the same commission,” recalls Christopher Gow. “So no one seemed to suspect that anything illegal was going on.”

Legal or not, the results were notably effective for both houses. Christie’s profits leaped from $25.2 million in 1994 to $33.9 million in 1995 to $53.6 million in 1996, while Sotheby’s profits jumped from $20.3 million to $32.6 million to $40.9 million over the same period.

“If you think hearing about those kinds of numbers drove dealers crazy with suspicion, you’re right,” says the contemporary-art dealer in SoHo.

News of their monstrous legal woes comes at a critical time for both companies, as Sotheby’s seeks to tout the viability of its controversial new online auction site, – launched in January at a staggering to-date cost of $41 million – while Christie’s hopes to justify its radical decision to remove itself from the fray of high-volume, low-value online commerce.

Fiscal prognosticators at both firms weighing their online options back in 1998 could hardly fail to notice the mounting success of eBay, whose 10 million registered users last year generated $4 billion in sales with a $215.9 million profit for the San José, California-based company. Ostensibly, of course, the traditional auction houses have very different reputations, and merchandise, to sell. Last year, the average lot on eBay sold for $40 – a far cry from the $60.5 million fetched at Sotheby’s last year for Cézanne’s Rideau, Cruchon et Compotier and the $45 million for Picasso’s Nu Au Fauteuil Noir at Christie’s.

Sotheby’s, the traditional innovator of the two firms, moved first to hoist its venerable name online for Internet auctions. Behind this effort was David Redden, the entrepreneurial head of Sotheby’s books-and-manuscripts department. Last June, Sotheby’s announced a deal with Internet giant to launch, a site for novice collectors. To cement the deal, the Seattle-based Amazon agreed to invest $45 million in stock, host the site at its Seattle headquarters, and provide the technology, the site design, and half the marketing costs.

Audacious as it may have been as a business move, the creation of struck some in the art world as a dubious achievement, guaranteed to dilute some of the glamour of the Sotheby’s name. “It makes you wonder what Sotheby’s is thinking,” notes a leading decorative-arts dealer in Chelsea. “Sothebys-dot-Amazon-dot-com – it sounds like Hermès-dot-Kmart-dot-com.”

As a counterweight to the mass-oriented Amazon site, Sotheby’s has also established, an elite Website for what it sees as a discerning but untapped global audience. “It’s been a gleam in the eye for quite some time,” Redden says of the site, which consumed an alarming $40 million of capital in 1999 alone. Designed to offer fine and decorative art, antiques, jewelry, watches, and books, it was launched in January with a $15 million advertising campaign.

In order to find vast quantities of merchandise to feed the theoretically insatiable appetite of Internet buyers, along with the necessary guarantees of authenticity and quality, Redden came up with the idea of signing up thousands of the dealers around the world upon whom Christie’s and Sotheby’s depend for much of their business. Redden persuaded Dede Brooks of the necessity to sign them up fast. And to corral the dealers whose names would lend prestige to the venture, Brooks personally scurried around Manhattan’s Upper East Side in her chauffeur-driven limousine, signing up recruits.

Richard Feigen, one of Manhattan’s most exalted fine-art dealers, received one such visit. “I’d promised Dede I would participate,” he recalls, “so when she ran over to my office to sign me up, I said, ‘Okay, Dede,’ and gave her my name. But I didn’t think much about it at the time.”

Feigen is not holding his breath for dazzling online results. Asked to supply an object for the first postings on in January, he selected a painting by Sir Joshua Reynolds, the eighteenth-century portraitist. “I didn’t know what to put on there, frankly,” Feigen says. “I mean, we don’t have any garbage-y Picassos or Chagalls or anything like that.”

During the three weeks the Reynolds portrait appeared on, Feigen received just two responses – a woman calling to report that she was married to a descendant of the sitter and a man in the Midwest offering to pony up half of the low estimate. “Those were the only two contacts we had,” Feigen says. “But we weren’t expecting anything anyway, so it really didn’t matter to me.”

“It makes you wonder what Sotheby’s is thinking,” notes a dealer in Chelsea. “Sothebys-dot-Amazon-dot-com – it sounds like Hermès-dot-Kmart-dot-com.”

Feigen’s partner, Frances Beatty, adds, laughing: “The Internet is sort of like a Pandora’s box that exposes us to the kind of people that Richard has spent 30 years trying to eliminate from our radar.”

Noting that roughly 30 percent of all the property sold at Sotheby’s live auctions goes to absentee bidders who have presumably seen the object only in a catalogue, Redden counters: “If you live in New York or London, it’s not difficult to get to an exhibition. But if you live in Chicago or Hong Kong, you’re obviously out of the running unless you can afford the time to travel there to touch and feel it.”

Christie’s, meanwhile, has taken a radically different approach to the Internet, having decided not to sign on with a major online retailer. Explaining the move, an executive told the Times, “We made a decision to protect the integrity of our brand name.” The idea of working with an outside team to sell high-volume, low-value merchandise, he added, “didn’t make commercial sense … We seek greater efficiency and market share at the top end of the business.”

While Christie’s decision to remove itself from the fray of high-volume, low-value online auctions may turn out to be profitable, it has prompted a considerable exodus of executives and experts from the 234-year-old company, lured by the promise of stock options and plumper salaries at online art and auction sites.

Christie’s is not alone in seeing departures from its ranks because of the Internet, however. Last year, the entire collectibles department of Sotheby’s in London offered itself en masse to eBay. Politely rebuffed by the Internet giant, they wound up at I-collector, a London-based auction Website.

To fill the gaping void left by Brooks’s departure, the Sotheby’s board has appointed Bill Ruprecht, a former rug expert who has nominally run the firm’s North and South American operations since 1994 – the year Brooks assumed control of the company’s operations worldwide. Some question whether he is up to the task. “Bill’s an extremely nice guy,” observes one Sotheby’s veteran. “But he’s basically incapable of making a decision. He deferred to Dede in everything.”

The problem, ex-Sotheby’s staff members explain, is that Brooks was so allergic to disagreement that she purposefully stocked Sotheby’s senior management with malleable executives. One former department head agrees: “She’s not a good delegator.”

But even if Sotheby’s straightens out its affairs, an even greater threat lurks in the background. The auction houses may now be considered valuable pawns in the global luxury-goods wars currently raging. Since the recent debacle, the most ardent suitor for Taubman’s controlling stake in Sotheby’s is said to be Bernard Arnault, the relentlessly acquisitive Paris-based chairman of LVMH, the world’s leading luxury-goods conglomerate, who last year snapped up Phillips, the London-based auction house, for $120 million. In an urgent reprise of talks the two men secretly held last fall before the current auction-house scandal, Sotheby’s majority shareholder and the LVMH emperor are said to be in the midst of negotiating a deal for Arnault to acquire Taubman’s shares.

“Arnault was dying to buy Sotheby’s last year, but he basically didn’t offer Alfred enough money,” says a source close to Taubman. “Alfred’s position was, ‘It’s not for sale, but for the right price it could be.’ “

If Arnault succeeds this time around, however, the 50-year-old Frenchman may triumph in his goal of overtaking his longtime business archrival, the 63-year-old François Pinault. Former pals, the two are now said to despise each other. Each has a net worth in the billions and a fierce desire to rout his foe’s ambitions for dominance of the luxury market.

Last year, the two French titans fought an ugly and expensive duel for control of Gucci, the ultimate fashion accessory of the late nineties. Still seeking revenge, Arnault beat Pinault after another drawn-out fight in February by gaining control of Etude Tajan, France’s leading auction house, which he is expected to merge with Phillips in a tactical maneuver to trump Christie’s chances in the soon-to-expand French market. This spring, the French government has pledged to rescind the 450-year-old national monopoly that has prevented non-French houses from operating there.

In addition to his predatory ardor for the world’s leading auction houses, Arnault has also been accruing substantial stakes in online auction sites, including eBay, QXL, and I-collector, and has made no secret of his desire to take Phillips and Tajan online. Should he succeed in adding Sotheby’s to his lineup of acquisitions, he would clearly be in a strong position to overtake Christie’s.

When confronted with the widespread assumption that Taubman will have to sell his stake, Michael Sovern of Sotheby’s responds casually. “Not necessarily,” he says. “I think that’s going to depend on his judgment of his own needs. And I think he believes that we have first-rate management and an absolutely terrific franchise. So it is possible for Mr. Taubman to simply capitalize on his investment.”

And when asked about rumors that the Feds will soon let the auction house know its fate, Sovern demurs. He’s been told nothing but adds brightly, “If you hear from the Justice Department, will you please let us know?”

Prix Fixe?