It is said that when a messenger brought the news to Louis XVI that the Bastille had been taken, the monarch asked: is this a rebellion? No Sir, replied a minister standing by, this is a revolution.  Could the same be said of the public announcements made last week by the French auctioneers?

On 29 November 2016, the National Union of French (Commercial) Auctioneers (Syndicat National des Maisons de Ventes Volontaires, also known as ‘SYMeV’) publicly called for the abolition of the French Auction Council (Conseil des Ventes Volontaires, or ‘CVV’), the State-appointed regulator.  The CVV was established in 2000 when the French auction market was reformed.  Until then, auctioneering in France was the prerogative of state-appointed officials.  Under pressure from the European Commission, the state monopoly was replaced by a new regime allowing qualified auctioneers to hold commercial auctions, subject to certain conditions including the holding of a licence issued by the CVV.  Apart from issuing auction licences, the CVV was tasked with taking disciplinary action against commercial auctioneers, and producing an annual report of its work. Since legislative changes introduced in 2011, again under pressure from the EU, commercial auctioneers no longer require a licence from the CVV.  They must, however, file a declaration setting out their proposed activity, accompanied by documentation designed to satisfy the CVV that they meet certain conditions, including carrying professional indemnity insurance and operating a trust account for client funds.

In December 2014, at the request of the French government, the CVV issued a report recommending further regulation of commercial auctioneers.  In particular, the CVV recommended regulating the auctions of ‘intangible’ moveable property (financial instruments, intellectual property, domain names, administrative licences, etc), thereby extending its reach.  It also recommended the introduction of a ban on auctions of ‘distasteful’ material (e.g. relics and instruments of torture more than 100 years old).  This, coupled with the public declarations by Catherine Chadelat, the President of the CVV, that auctioneers were ‘at risk’ and that money laundering, trafficking and undue influence were on the rise, inflamed the debate; the message was that the CVV would keep French auctioneers on the right track.  Needless to say, the SYMeV was not amused.

Last week, the SYMeV publicly (and somewhat angrily) called for the abolition of the CVV, and outlined its principal complaints as follows:

  • The CVV’s principal mission was to license commercial auctioneers. The licensing requirement no longer applies, therefore the CVV has been deprived of its raison d’être.
  • France is the only country regulating commercial auctions by means of a state-sponsored regulator.
  • Regulation distorts competition with other French art market businesses such as galleries and dealers, and with foreign auction houses.
  • The French courts have overturned several disciplinary rulings by the CVV, yet such rulings cause significant damage to auction businesses.
  • The approach of the CVV is dogmatic and formalistic, and compliance with pointless administration distracts auctioneers from their day-to-day business.
  • Auctioneers are concerned that the CVV imposes severe disciplinary sanctions for minor regulatory infringements.
  • Other bodies could do the work done by the CVV more effectively
  • The CVV requires significant funding which is increasing in spite of the reduced scope of its activity: its annual budget has increased from €800,000 in 2001 to €1,800,000 in 2015.

Further, the SYMeV publicly lamented the increasing number of rules and regulations having a paralysing effect on French auctioneers, at a time when international competition and new technology call for creativity and adaptability.  Auctioneers called on the government to simplify the regulatory framework, in order to allow competition on a level playing field and to relieve smaller auction businesses from the pressure of compliance.  The rate of import VAT, copyright royalties payable on reproductions in sale catalogues, the collection of the Artist Resale Right and the obligation to maintain a detailed inventory of consigned lots, were singled out as issues in need of reform.

From the SYMeV’s recent manifesto, it is clear that French auctioneers are finding the CVV intrusive, oppressive and unnecessary.  That is hardly surprising.  Most regulated professions harbour similar feelings towards their own regulatory body.  The complaints voiced by the French auctioneers echo the concerns raised by the British art market whenever a government-appointed regulator is threatened.  Serious doubts have been expressed over the wisdom of regulating a global market such as the art market at a national level, and the impact of a government-appointed regulatory body on international competitiveness.  Others have questioned whether a market as diverse as the art market can be effectively monitored by a regulatory body, considering the range of businesses, their size, the number of collecting categories and the spectrum of business models.  There are concerns over the red-tape that a regulator would inevitably introduce.  The cost of regulation is a prevailing objection, as well as the burden that such costs would place on smaller businesses. The UK pro-regulation lobby should take note of the complaints voiced by auctioneers on the other side of the Channel, and remember that whilst regulators might convey a cosy feeling that market participants are safe under their watch, the reality can be very different.  We only need to look at the banking sector.

How can one inject greater integrity in the art market if a regulatory body is not the answer?  Better enforcement of existing laws and regulations would be a step in the right direction.  We have a plethora of criminal, competition and consumer protection laws.  These laws are not consistently enforced because enforcement bodies, including the Metropolitan Police and the Competition and Markets Authority, lack funding.

French auctioneers advocate self-regulation.  That would be another step worth taking.  Whether self-regulation alone would fully address the need for greater integrity, is another question. However, well designed and sensibly enforced self-regulation, when combined with better law enforcement, could deliver positive results.

Pierre Valentin

Published 6 December 2016