Nor can the report, published last week, establish a clear link "that would indicate systematic trade diversion within the EU away from those Member States which introduced the right for living artists in 2006".
However, the EC has decided to conduct another impact study in 2014, two years after the extension of the levy to the estates of artists who have been dead for less than 70 years, when it believes the picture should be clearer.
The EC also expresses concern at the administrative and costs burden on smaller dealers of fulfilling their obligations under ARR. It criticises some of the collecting societies involved and says it will establish a system of best practice to minimise costs and red tape for end users in the trade.
The concluding section of EC's report, also states:
• There are clearly pressures on European art markets, in all price ranges, and for both the auction and dealer sectors, and it is recalled that the scope of the application of the resale right will be significantly expanded following the ending of the derogation for the works of deceased artists on 1 January 2012.
• At the same time, the quality of the administration of the resale right appears to vary considerably across the EU, bringing costs to art market professionals and artists alike. The burden can be particularly high for those at the lower end of the market who are proportionately more deeply affected by the costs of administering the right.
• The Commission recognises, furthermore, that in some Member States inefficient administration of the resale right presents a not insignificant burden on art market professionals and may also lead to unnecessarily high deductions from the royalties due to artists and their successors.
• In light of the economic significance of the sector, the Commission considers that market developments should be kept under review. The Commission will undertake a further reporting exercise and deliver its results in 2014.
• The Commission will also pursue its commitment to persuading other countries to implement the resale right.
• In light of the volume of transactions subject to the resale right, the European Commission also considers that there would be benefit in the exchange of best practice at European level with a view to managing and minimising the administrative costs in all Member States. To this end it intends to establish a Stakeholder Dialogue, tasked with making recommendations for the improvement of the system of resale right collection and distribution in the EU.
• More broadly, the European Commission is concerned that collecting societies should operate to a high standard of governance and transparency with regard to their members and to commercial users, and will bring forward a proposal in this regard during 2012 to apply in equal measure to collecting societies administering the resale right.
British Art Market Federation chairman Anthony Browne welcomed the report. "My initial view is that the Commission has produced a balanced report which is based on fact," he told ATG.
"There are references throughout the report to the need to improve the management of ARR by collecting societies, a point which we made strongly to the Commission. This is reflected in the last conclusion on page 11, which makes specific reference to ARR in the context of proposals to improve the performance and transparency of collecting societies during the course of 2012."
And he added: "It is particularly pleasing that the Commission intends to keep market developments under review and that there will be a further reporting exercise to be delivered in 2014.
"All in all, given the lack of any serious political pressure to extend the derogation from Member States Governments, most notably the British Government which has by far the largest art market, the Commission has done a thorough economic analysis."
"It does address all the points that the European Art Market Coalition made and it leaves the way open for us to make further representations if we can detect firm evidence of a diversion of trade away from the UK in the coming two years, when in the UK in particular the ARR levy extends from 14% to 62% of the fine art market by value."
By Ivan Macquisten
