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The first, secret meeting between top lieutenants charged with executing the price-fixing conspiracy plotted by their superiors at Christie’s and Sotheby’s auction houses was a nervous exchange in a London hotel room. Former Christie’s Chief Executive Christopher Davidge told a Southern District of New York jury Wednesday that his 1993 rendezvous with Sotheby’s Diana “DeDe” Brooks to work out the details of the plan devised by Christie’s chairman Anthony Tennant and Sotheby’s chairman A. Alfred Taubman was uncomfortable. “Both of us were very nervous at the outset,” Davidge said. “We both knew the meeting had far-ranging consequences and it shouldn’t be taking place.” Davidge was the first major witness to testify for the government as it tries to prove that Taubman was guilty of price-fixing on sellers’ commissions between Sotheby’s and its long-time rival between 1993 and 1999. Prosecutor John J. Greene brought Davidge to the witness stand with a stream of memos and other documents that traced the conspiracy to a breakfast meeting between Tennant and Taubman in 1993. In a handwritten memo displayed on a large projection screen in Judge George B. Daniels’ courtroom, Tennant tells Davidge that he and Taubman had agreed on a host of measures designed to boost revenues for the erstwhile enemies — with the highlight being the plan to fix sellers’ commissions. Both men, Davidge reported, agreed the auction houses were losing money by giving breaks to preferred customers and, in some cases, charging no commissions at all to win the right to auction fine jewelry, antiques, and paintings by the Old Masters or from the Impressionists. The conspirators also agreed to stop criticizing one another in the press, cease publishing market share estimates and refrain from poaching on the other’s employees. After reviewing the memo with Tennant, he said, the chairman told him he should expect a call from Brooks. Tennant, he said, indicated that he would like to go further if satisfactory progress was made, and that “this would be just the start of the cooperation.” But Davidge also told the jury that, among the several measures agreed to by Taubman and Tennant, the most difficult to achieve would be the agreement on sellers’ commissions, in part because of deals already in place with existing customers. By 1995, however, Christie’s and Sotheby’s were ready to move. Under their agreement calling for Christie’s to make the first move, Davidge flew to John F. Kennedy International Airport bearing a copy of a proposed press release that Christie’s was ready to issue on the new “non-negotiable” sellers’ commissions. The pair huddled in Brooks’ Lexus at the airport while she read the press release and gave her approval. Within weeks of the Christie’s announcement, billed as a more “fair and equitable” means of treating sellers, Sotheby’s followed suit. More meetings followed, and although Davidge said these meetings were not kept secret from staff members, he referred to Brooks as “my special friend” in a memo asking a secretary to set another summit. Davidge also said that he and Brooks, under pressure from Taubman and Tennant to begin price-fixing, had to dissuade the chairmen from holding a meeting in which all four would be present. “She was aware of that [proposed] meeting and she discussed it with her chairman and said it was very bad idea,” he said. SEVERANCE DEAL AT ISSUE Taubman plans to defend himself by attacking the credibility of Davidge — largely through showing that Davidge has a strong motive to lie. While Greene denies the charge, defense lawyers Scott W. Muller and Robert B. Fiske Jr. of Davis Polk & Wardwell contend that the government acquiesced in the payment of an $8 million severance package to Davidge by Christie’s to ensure his damaging testimony against Taubman. “Christie’s is paying Davidge $8 million to come here so that they can get amnesty from the government,” Fiske told the jury during opening arguments on Friday, saying the payment had nothing to do with severance. Before court concluded Wednesday, Muller began his cross-examination of Davidge by sarcastically asking, “That’s what you call it, severance?” Fiske and Muller also plan to go after Brooks, who will be testifying as part of her own leniency deal with the government. They will try to show that she was master of the day-to-day operations of Sotheby’s and conceived of the price-fixing scheme herself. Wednesday, Davidge presented his notes from one meeting with Brooks that seemed to support the defense’s argument. Davidge said he expressed surprise to Brooks that market share numbers presented by Taubman to Tennant at their breakfast meeting were very inaccurate. Brooks responded, according to the notes, that Taubman was “out of touch, not always best informed, never been on the cutting edge of the business.” But cutting against the defense’s portrayal of Brooks as an independent conspirator was evidence presented Monday by the government showing that Taubman and Tennant met on several occasions. Taubman’s executive assistant, Melinda Marcuse, testified that she intentionally referred to Tennant as a “gentleman,” and not by name in Taubman’s appointment book, out of concern for his privacy and what “gossipy” people would say about meetings between the rivals. Taubman could face as much as three years in prison if convicted. Tennant, who was charged with price-fixing along with Taubman, has refused to leave England and face trial in the United States. The trial is expected to last several more weeks.

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