Keeping eBay at Bay

Courtesy Conseil des Ventes Volontaires de Meubles aux Enchères Publiques

Christian Giacomotto, chairman of France's Conseil des Ventes

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In a lawsuit filed on December 3, 2007, the Conseil—comprising 11 members appointed by the minister of justice to protect consumer interests—accuses eBay of flouting French law by claiming to be brokers in order to avoid the country’s stringent auction regulations. These require that all auctioneers be licensed by the Conseil, publish sales figures and take out extensive insurance to cover instances of breakage, loss and forgery. Because eBay is not currently subject to this vetting, there is “distorted competition” between the site and traditional houses, says Conseil chairman Christian Giacomotto. He is adamant that eBay be considered an auction firm, since it receives commissions on items sold on the site and acts for both vendors and buyers.

Alexandre Menais, director of legal and public affairs at eBay France, counters, “Our fiscal setup respects what is permitted.” He calls the lawsuit “totally unwarranted and inappropriate” and accuses the Conseil of “lacking intellectual rigor,” given that its 2003 annual report referred to eBay as a courtier aux enchères en ligne, or broker for online bidding, and that the firm’s activity has not changed since. “We do not intervene between buyer and vendor,” says Menais.

For eBay, being shut down in France would be costly. The country is its fourth-biggest market, with 6.5 million people conducting business on eBay.fr every month and thousands earning a living selling on behalf of others.

The Conseil believes that more than 95 percent of transactions on the site are fine but is concerned about the 5 percent that may involve fakes, stolen goods and objects whose origins are impossible to trace, says Giacomotto. The Conseil reports that counterfeits are most common in the categories of fine art, tribal art, bronzes, Japanese prints, icons, Art Deco furniture and, especially, Chinese antiques and that sales of such objects amounted to about €73 million ($98.4 million) in 2006.

Giacomotto claims that the Conseil has been inundated with complaints from the site’s clients—mostly about fakes—but, as the law stands, is powerless to act. He also stresses that, unlike in the U.S. and the U.K., class actions are not allowed in France and that it is too expensive for most individuals to take eBay to court. “The client needs protecting,” he says. “We are not anti eBay, but we can’t just stand by and do nothing. The law needs clarifying. It’s all too easy for eBay to claim that it has no responsibility and that people can do what they want. In a market economy, it is not acceptable to erect a fortress of irresponsibility.”

Many French auctioneers agree. “It is urgent for online auctions to be subject to the same obligations as traditional sales,” says Drouot president Georges Delettrez. Hervé Chayette, president of the national auctioneers’ union (SYMEV), is less forthright. A survey of SYMEV members suggests that they are divided over whether Internet sales represent unfair competition or new business opportunities. “We need to be vigilant about online sales,” Chayette says, “but it’s pointless to mount a rearguard action. The move toward the Net is irremediable.”

At present, the only auction house in France to offer online bidding during salesroom auctions is Christie’s, but Hôtel Drouot is investing in the technology. Three organizations stage online sales on the eBay model, with the Conseil’s approval: Ivoire, a group of firms from 16 cities; Collectoys, the Bourges-based toy-auction specialist; and Bretagne Enchères, which sells vehicles.

The Conseil wishes there were more. “French auctioneers have been too slow to grasp the Internet revolution,” says general secretary Christophe Eoche-Duval, who reveals that two further eBay-like sites are in the pipeline: Drouot is working on one for low-priced items, expected to be operational in September, and Neuilly-sur-Seine auctioneer Claude Aguttes will soon launch gersaint.com, where objects for sale are guaranteed by an approved auctioneer.