US officials have in recent weeks served subpoenas on several auction firms, including Sotheby's, and on a wide range of top-drawer Manhattan galleries for information that may help with the inquiry.
Investigators have seized truckloads of documents including travel records, telephone bills and correspondence between auction houses and dealers. They are looking for evidence of "bid pooling" or "bid rigging", which entails buyers agreeing in advance of a fine arts auction to hold back from bidding against each other for a work and thus holding down the selling price They can then sell on the piece at a considerable profit.
Christie's disclosure of the Grand Jury subpoena was made as part of a statement to the Stock Exchange announcing its intention to raise US$75m (pounds 46.8m) to finance new premises in the Rockefeller Centre in New York and expand facilities elsewhere. When raising money, companies are under a duty to disclose any information that may be relevant to shareholders.
Peter Blythe, Christie's group finance director, said the company's US subsidiary, Christie's Inc,was co-operating fully with the Justice Department and believed it had "acted properly at all times".
"Clearly, bid rings are not something which auctioneers favour because we benefit from getting the very best price for the seller," Mr Blythe said. Auction houses make their living by levying a buyer's premium of up to 15 per cent on works sold.
Bid rigging is also illegal in Britain but rumours of pooling by dealers circulate at intervals.
News of the investigation sent shockwaves through the fine arts community in New York yesterday. If any wrongdoing is uncovered it could seriously tarnish an industry that depends on a sterling reputation to retain its clientele.
"This kind of thing puts us all in a bad light and could cost some dealers lots of money," remarked Walter Edelman of the Edelman gallery. A frequent visitor at both Christie's and Sotheby's, Mr Edelman said he had never been approached by a rigging consortium, But the allegations did not seem outlandish to him.
One of the galleries to have received a subpoena spoke to The Independent, anonymously. "We do not know of any instances where this has happened," the owner said. "But there may be people out there like this; every gallery has to make a profit. It's clear that in the history of art dealing there have been cases of people working together in this way."
Another technique for rigging sales involves dealers paying commissions to potential rivals to persuade them not to bid.
The Justice Department refused to offer any details of the investigation. But a spokeswoman confirmed that "the anti-trust division is looking at the possibility of anti-competitive practices in the fine art auction industry".Reuse content