What's the difference, runs the art world joke, between Christies and Sotheby's? Answer: Sotheby's are tradesmen trying to be gentlemen and Christies are gentlemen trying to be tradesmen.

Sotheby's (founded 1744), and Christies (founded 1766), have long traded on their reputation as gentlemen, with the underlying promise that honour is more important than cash. However, recent allegations in New York, confirmed by the sudden resignations earlier this week of Sotheby's chairman and de facto owner Alfred Taubman followed 24 hours later by managing director Diana Brooks, would appear to confirm Adam Smith's view that "whenever two gentlemen of commerce are met together, their conversation invariably turns to the restraint of trade".

Because, if the allegations are true, it would seem that for all Sotheby's and Christies we're-the-biggest, we're-the-oldest, trust-us patter, these gentlemen of commerce have been stitching up the punters for years. Also, an investigation by the US Justice Department into alleged price-fixing in 1997 has recently been boosted by Christies having been persuaded to hand over evidence to the investigating team, effectively shopping their arch rivals in return for immunity from prosecution. This less-than-gentlemanly behaviour came to light following the resignation of Christies chief Christopher Davidge on Christmas Eve. Now come Taubman and Brooks. What isn't known is whether this triple beheading is the beginning of a purge by the US Justice Department or simply the vestigial honour of gentlemen caught cheating at cards.

So what have the chaps done that is so terrible? For all their gentlemanly trappings, auctioneers, whether of Caravaggio or cattle, make their money by taking a commission from the seller in the same way as estate agents do. Or at least they used to.

In the late 1980s, however, when the bottom fell out of the contemporary art market, Sotheby's and Christies both decided their cash flow needed a boost. Why limit themselves to taking money from the seller, they decided, when the buyer could be stung as well? So a cool 15 per cent, known as the buyer's premium, was added to the hammer price. In Europe, this meant a picture knocked down at, say, £10,000 cost the purchaser £11,500 plus VAT on the additional £1,500.

The art market cried foul. Surely this couldn't be legal? Apparently it was, and with Sotheby's and Christies between them controlling 95 per cent of salesroom business worldwide - buyers, whether in the trade or private collectors, had little option but to cough up. This double levy is now a standard fact of art world life, creating the dubious situation that, although nominally acting for the seller, the auctioneer actually makes more money from the buyer.

Then, four years ago, Sotheby's and Christies came up with another money-making wheeze. Instead of a flat-rate commission for sellers, both auction houses brought in a sliding scale ranging from 2 1/2 per cent to 10 per cent - which on a sale of a $1 million makes a substantial dent in what the seller actually pockets from the deal - and an equally substantial boost to the coffers of the auctioneer.

The new pricing structure was brought in by Christies in 1995, swiftly followed by Sotheby's. Once again there was an outcry from the art world. The auction houses' defence was the usual one of matching the competition's pricing structure. But genuine price wars result in costs falling - think of fuel and supermarket prices - rather than rising, which was the case here.

This time somebody in the US Justice Department smelt a rat and by 1997 an antitrust investigation was under way. Later that year, Christies was bought by a private company, which is believed to have helped give the Justice Department leverage.

Although the investigation was hardly a secret, it was Christies admission in January this year that "Christies is co-operating with the department of justice and has entered into an amnesty agreement" that started the slide. A year ago Sotheby's share price stood at $47. Yesterday it was $14.

Under US anti-trust laws, any collusion on fixing commission is an illegal restraint of trade. In the US this is a criminal offence and, if proved, will devastate the auction world.

In 1998, Sotheby's made a £57 million profit from a turnover of £1.2 billion. In addition to massive fines that could be imposed by the Justice Department, Sotheby's have 36 law suits outstanding against them - and Europe and Australia are still waiting in the wings. Nor should Christies gloat too much. They may have avoided criminal prosecution in the US, but the amnesty deal has no currency elsewhere - and there are no doubt plenty of honest tradesmen who will try their luck in this highly lucrative trade.