The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value or when the auctioneer accepts a fictitious bid on behalf of the seller so as to manipulate or inflate the price of the property.
Auction is a great place to buy and sell real personal property. Unfortunately, there are many buyers in this business that want more than a good auction deal.
When two or more people agree to not bid against one another and then divide the merchandise at the end of the auction, you have collusion. Does it happen and is it prevalent in auctions? The simple answer is unfortunately YES.
Collusion is bad for the seller, as the value his goods are artificially depressed and he nets less money at the conclusion of the auction. Collusion is bad for the buyer since a pool of money can easily outbid a single buyer. This leads to people not bidding against the pool of money for fear of having to pay too much, or the fear that the pool is going to win the item no matter what the final bid. This has a chilling effect on active bidding during the auction and dampens the auction spirit. Collusion is bad for the auction house since it gives a false impression of what goods are selling for, and negatively impacts the auction house’s profitability.
Finally collusion is illegal!
Remember – you have no friends at auction – !