'Wall Street Journal' Auction Story Called 'Misleading'

By William George Shuster -- JCK Online, 1/1/2008 2:00:00 AM

A Wall Street Journal article's allegations of collusion between some luxury watchmakers and Antiquorum auctioneers to boost the brands' auction prices, prestige, and consumer demand are unfounded and misleading, say those named in the story.

Antiquorum founder Osvaldo Patrizzi, who left the company in August, said, "There has never been any collusion between Antiquorum and any watch manufacturer."

The Oct. 8 article alleged that Antiquorum S.A., Geneva, let some Swiss watchmakers secretly intervene in auctions to force up bids and sale prices on their vintage timepieces (through anonymous bidding) to boost the brands' market-perceived worth and retail prices of new watches. The article cited various brands but focused on Patek Philippe and Omega.

Those mentioned in the article dispute its claims. The allegations are "unfounded and inadequate," said Béatrice Howald, head of media relations for Swatch Group, owner of Omega.

Luxury brand Patek Philippe "prefers not to validate misleading articles," said a statement by Patek Philippe USA, which declined further comment.

Antiquorum spokesperson Karin Tasso said the Wall Street Journal had "gone down to the level" of the tabloids, and "bits and pieces" of interviews were "taken out of context."

Patrizzi said there was nothing secretive or ethically questionable about Antiquorum auctions, which, he noted, are supervised by the Swiss government. Luxury watchmakers must bid "against multiple other legitimate bidders [and] never made a secret" that they buy "for their [museum] collections and frequently announce their important purchases," he said.

Patrizzi, in a 10-page letter sent to the Wall Street Journal on Oct. 17, which was obtained by JCK, detailed what he called distortions and errors. The WSJ story, for example, said, "The business of auctions for collectibles is not a model of transparency." Patrizzi's letter countered, "Thematic auctions are transparent." Swiss law requires "the presence of a government official, a judicaire, who presides over the entire sale" and keeps records of it. Also, Antiquorum auctions are "rigorously followed by the trade press, collectors, and everyone else in the auction and watch world."

The WSJ article implied retail prices of some brands' new watches are based on high auction prices for their vintage watches. Patrizzi called that preposterous and said review of past auctions clearly shows new watch prices aren't affected.

Swiss business newspaper Finanz und Wirtschaft noted that "a single auction house doesn't represent the whole [$2 billion] collectors watch market. ... What is portrayed as conspiratorial manipulation of the market merely reflects a practice of big watch houses with which observers are already familiar."

The newspaper continued, "[It's] wrong to speak of artificial prices [when] dealers and private collectors actively bid against one another." It noted that top brands like Patek Philippe "fetch top prices at Christie's or Sotheby's auctions, in exactly the same way as at an Antiquorum auction."

Anonymous bids, a watch industry source told JCK, are used not to boost prices but to prevent competing bids from going higher if a brand's interest in an item were known. Finanz und Wirtschaft said prices of 46 lots bought by Omega at Antiquorum's 2007 Omegamania sale "were bid up by collectors and dealers, not the other way round." Howald noted, "All big brands acquire watches for their museums at auctions."

Coincidentally, in October 2007, advertisements in the WSJ showed the Omega watch John F. Kennedy wore at his 1961 presidential inauguration. Omega's museum, the ads noted, bought them at auction in 2005 for $350,000. "We find the irony of the Wall Street Journal helping Omega promote their auction watches quite amusing," Howald told JCK.