`People in the same trade seldom meet together for merriment or diversion but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

This 225-year-old quotation from Adam Smith's Wealth of Nations was cited by prosecutor John Greene in seeking to explain to a New York jury this week why Alfred Taubman, former chairman of Sotheby's auction house, would conspire against the public with someone in the same trade, namely, Sir Anthony Tennant, head of Christie's.

Mr Taubmen (76) was convicted by the jury on Wednesday of secretly agreeing to fix commissions with his deadly rival, and he now faces up to three years in jail when sentence is handed down in March.

The plot to charge commissions that would never prevail in a competitive market, crating ultimately $400 million in extra wealth for the two auction houses, was hatched during 12 secret meetings in the 1990s in Mr Taubman's apartments in London and Fifth Avenue. Sir Anthony (71), who declined to travel from the UK to face trial and denies any wrongdoing, inconveniently kept memos of the meetings which were given to the prosecution by a Christie's executive to gain immunity.

One damning note shows the two men agreeing that commissions they charged "could be" identical, a clear breach of the Sherman Antitrust Act under which Mr Taubman was tried.

Mr Taubman himself recorded meetings with Sir Anthony, described as "Tony" or "a certain gentleman" or "****" in his daily planner, alongside routine appointments with royalty and his manicurist.

The jury therefore needed no convincing that the encounters took place.

The defence had only one recourse: to depict Mr Taubman as someone unconcerned about money, with no need to rob other rich people and therefore no motive. He "had it all... both fame and fortune; he had a net worth of $700 million," argued his lawyer, Robert Fiske, the former Whitewater prosecutor, who said that Mr Taubman met Sir Anthony only as a "social friend".

The former Sotheby's chairman was, in fact, argued Mr Fiske, an unwitting player in a conspiracy jointly organised by his CEO, Diana (known as DeDe) Brooks, with Christie's executives to end a costly rivalry by eliminating discounts and charging identical, non-negotiable commissions.

Ms Brooks, once the most powerful woman in the high-end art world, had herself pleaded guilty after Christie's agreed to co-operate with American investigators, and she expects a lesser sentence for fingering her former boss during the trial as the brains behind the scheme.

Mr Taubman's lawyers produced Michael Curle, a former Sotheby's executive, to say he once heard Ms Brooks snap, "Alfred Taubman doesn't run this company - I do."

Then Mr William Sheridan, Sotheby's chief financial officer, declared that DeDe would humiliate her chairman at board metings and Mr Taubman would meekly "just crawl back into his shell". Mr Sheridan also claimed that at executive discussions Mr Taubman was "more concerned with what time lunch was going to be served and what was for lunch," and a former business associate, Mr Bernard Winograd, testified that Mr Taubman "does have a sleeping disorder and can occasionally fall asleep involuntarily".

But the jury wasn't buying the idea of Mr Taubman as a rather vague, dozy old boy, "dumb and hungry" as Mr Greene put it scornfully, who was not interested in number-crunching.

The defendant was not only Sotheby's controlling stockholder, he sat on the boards of Macy's and Chase Manhattan, and they would not keep him on if he was "a know-nothing who only asked what is for lunch," said Mr Greene. "You don't become a millionaire without knowing how to read the bottom line."

Mr Taubman also had a motive, he argued: Sotheby's profits fell from $410 million in 1989 to $202 million in 1992.

The trial trial provided an insight into why Mr Taubman, a self-made shopping mall and property magnate from Detroit, bought Sotheby's in the first place. By doing so he was admitted to high society as the owner of a prestigious 18th century auction house whose famous sales had included Napoleon's rare-book collection and the love letters of Elizabeth Barrett and Robert Browning, and whose patrons included the Windsor family.

Having started work at the age of nine as a working class boy, Mr Taubman and his wife, Judy, a former Israeli beauty queen, had become part of the Manhattan, Palm Beach and London philantrophic elite (Mrs Taubman stayed away from the trial so as not to appear before the jury as a blonde "trophy wife").

George Bailey, Sotheby's managing director for Europe, mentioned during testimony: "No disrespect to Mr Taubman, but he particularly enjoyed meeting people of title and position in the UK".

As Adam Smith also wrote in Wealth of Nations that for rich people the chief enjoyment "consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves".

He "thought he was above the law," said Mr Greene, winding up for the prosecution. Mr Taubman left the court without a word and is expected to step down from his prestigious posts and sell his Sotheby's shares. An appeal is being considered.

The upshot of all this is that the outlook for the two auction houses is worse today than before: both companies had to pay hundreds of millions of dollars in fees and legal settlements, and the competition, at a time of recession, will be more brutal than ever.