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Is the French art market subject to enough regulation?

A recent symposium at the Crédit Municipal examined ways in which the market could be improved

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Paris

After October’s FIAC at which many participants barely recouped their expenses, fifty-seven French galleries, including twenty based in Paris, have closed down. A further hundred art dealers are likely to cease trading this year. Banks specialising in the art market agree it is suffering a deep recession. Auctioneers and antique dealers speak euphemistically of a return to normal conditions (with a reduction in turnover of at least thirty per cent). In this context a symposium was held at the Crédit Municipal on 18 and 19 December 1991 to discuss the possibility of creating an administrative body to regulate the market.

The notion of a watchdog for the art market is an intriguing one. The market economy operates by two distinct ways of doing business: the Stock Exchange or organised market, and the bazaar or free market. Since the art market in its various forms combines the characteristics of both these prototypes, the idea would seem to be to transform it into what economists regard as the ideal market, in which prices are fair and supply and demand are evenly balanced. However, the art market does not deal in neutral commodities as do the financial markets or the food trade. Values placed on works of art are more subjective. The question posed by the organisers of the symposium—how to “improve” the art market—has a certain poignancy in the current economic climate, if only because it sets out to allay the fears of those who invest in works of art. It was no coincidence that the event took place at the headquarters of the French capital’s “pawnbroker”, the Crédit Municipal, whose role was described by Managing Director Yves-Marie Laulan as “an observer of the art market seeking to encourage greater openness and fewer secretive practices”. The Crédit Municipal, known affectionately to Parisians as “ma tante”, grants 500,000 loans every year, secured by works of art which are put up for auction one or two years later.

The illusory nature of the subject was repeatedly referred to by the speakers at the symposium. On the Stock Exchange, all transactions are recorded and a supervisory body can exercise meticulous control. For example, it can detect when a suspicious number of shares are bought before any public announcement of their sale which might affect the share price. It can also oblige the purchasers to reveal their names. However, in the art market, even if public sales were strictly regulated, a ruling council could never keep track of every sale agreed by the many established dealers. It would be more difficult still to monitor deals struck privately, either directly or through intermediaries. Unlike the stock market, which is involved with abstract financial concepts, the art market handles tangible objects. So, as the debate progressed, it became clear that the increased openness advocated by practically all the speakers was a ludicrous proposition. The image of the art market with its combination of reticence and professions of faith was somewhat ill-defined.

The number of art dealers in France is uncertain. According to Jean Chatelain, lecturer in law at the University of Paris, they include “an indeterminate group composed of antique and junk dealers, traders who only sell at fairs or have a permanent stall in the flea market, gallery-owners and collector-dealers without definite legal status”. Figures from the Ministry of the Interior show that France has 15,000 licensed antique dealers and around 5,000 unlicensed traders. To the list of 1,077 galleries throughout the country should be added picture-framers and booksellers who also sell works of art. However, Michel Dauberville, chairman of the Comité Professionel des Galeries d’Art, claimed that while there were some 250 galleries in Paris, there were no more than 150 remaining in the rest of the country. It was almost impossible to determine the number of private sales. The turnover of the galleries was conservatively estimated as four times that of auctioneers, but there were some who believed that the ratio was more like ten to one. Bernard Rouget, lecturer in economics at Bourgogne University, said that contemporary works accounted for thirty per cent of annual art sales in France, amounting to FFr 3,000-4,000 million (£317.5-£423.3 million; $585.7-$780.9 million). However, all these figures were arbitrary. The situation was complex and very different from that of the Stock Exchange. Economist Philippe Simonnot, author of Doll’art, a penetrating examination of the deeds and misdeeds of the art trade, declared that the various protagonists in the French market were in “disarray”. “The auctioneers are highly organised”, he said, “but the galleries are beginning to join forces and to formulate a common code of ethics. As far as experts are concerned, their role is highly specialised.” Former chair of the Syndicat Français des Experts Professionnels en oeuvres d’art et de collection, Françoise Cailles described the role of the expert. Madame Cailles said: “Experts have no legal definition nor are they salaried; they are assumed to use certain methods but without any guarantee of results. Their reputation is based on the false premise that an expert does not make mistakes.

Meanwhile, as recent financial (and legal) reports show, prices increasingly depend on expert opinions. Paintings attributed to a certain artist at the time of sale are immediately re-sold for a higher price, to the consternation of the previous owner, when they are found to boast far more prestigious origins. This was one of the many topics raised during the two-day symposium. Others included estimates and guaranteed prices, fictitious offers, artificial price fixing and works bought back by the same gallery. There were discussions about the risk of running up against stolen goods, and clandestine agreements between dealers interested in the same work. All these practices distort the market but are nonetheless an integral part of it. The debate was conducted between insiders in the language of insiders. Their admirable intention was to break their own monopoly and protect the “consumer” who was not so well versed in the idiosyncrasies of a market which favours the seller rather than the buyer. But clearly no-one, except the Crédit Municipal representatives, believed that a Stock Exchange-style controlling council would be feasible. The more modest conclusion reached was that the art market should play by the rules and apply existing sanctions provided by the codes of ethics of the French galleries and by the auctioneers’ ruling council. Finally, the risks inherent in operating in a free market should be accepted.

Originally appeared in The Art Newspaper as ‘Does the art market need a watchdog?'

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