Phillips steps up auction house rivalry

Phillips has its hands on paintings by the likes of Cezanne and Van Gogh

By BBC News Online's North America Business Reporter, David Schepp

Watch out Sotheby's and Christie's, here comes Phillips.

While it may not be the most glamorous of monikers to adorn a big New York auction house, Phillips does intend to wow attendees at its spring auction with a collection of art valued at more than $80m (£55.6m).

This is the week of the big spring auctions, and Phillips is first at the gate. On Monday evening, it will offer up seven works by 19th century painters Paul Cezanne and Vincent van Gogh.

The collection belongs to veteran art dealer Heinz Berggruen and marks further headway by Phillips into the prestigious arena of impressionist and modern art auctions.

Exclusive territory

It is a bold foray into a heretofore soft auction market. And Phillips' move onto the turf of Sotheby's and Christie's is not welcomed by the veteran auction houses, which are still smarting from autumn sales that produced worse-than-expected results.

At its autumn sale of impressionist and modern art, Christie's failed to sell nearly half its works and brought in just $144m - far short of its goal of $163m-219m.

Sotheby's and Christie's are also reeling from a series of scandals. Both names have been in the news recently following grand jury indictments on charges of price fixing.

David Norman, co-chairman of Sotheby's, is sceptical of Phillips' move into the prestigious world of impressionist and modern art auctions.

"They don't have a great staff of specialist and experienced experts. And they don't really have much of an organisation established yet."

The Arnault effect

What Phillips does have is cash - and a lot of it.

Following the purchase of Phillips by European design house LVMH two years ago, LVMH chairman Bernard Arnault has not only shown he has the cash to compete with the seasoned auction houses, but is willing to put that cash where his mouth is.

Following in the footsteps of Christie's and Sotheby's, Phillips is guaranteeing the value of the works it sells.

But a soft economy may spell doom for all three spring auctions this year, as investors rein in cash and sit on the sidelines awaiting the US economy's next move.

That has some veteran auction officials feeling jittery.

The auction houses are right to be nervous says Judd Tully, who follows the twice-yearly auctions for Art & Auction magazine.

"For the next two weeks about $600m or so of art is going to come on the block at the three major houses. And some people are wondering if [the] art boom is falling off like the Nasdaq did."

'A certain insulation'

But Christopher Eykyn, an expert in impressionist and modern art at Christie's says the stock market's woes should have little impact on serious buyers of great art.

"In the sort of price ranges that we are talking here [from about $350,000 to about $30m]¿ there is amongst those buyers - if you like - a certain insulation against the stock market wobbles," Mr Eykyn said.

But just like the US economy, no one really knows what to expect. Meanwhile, both art buyers and sellers are anxiously awaiting the results of the spring auctions.

"A lot of it has to do with psychology and mood," says Art and Auction's Tully. "People will be making split-second decisions," he says. "And you can't call your agent and find out whether you should or should not."