Collusion in the OA Market - Right or Wrong?

[Terry Doyle]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

 

Your clarified point is pretty spot on. Having a random hobby acquaintance come to you to try and clear the field makes you wonder how many people he's asking. It's also a lame- move on any continent.

 

I know if I want to bid on something I tend to compare notes with others to see if my estimates our outdated, or overstated, or right on with others. This hobby has taught me, more than once, that wrapping your head around a potential value ahead of time will help you get a piece of art at a price you might not have considered reasonable in real time as it's being auctioned.

 

Without preparing ahead of time, comparing notes, getting feedback on market perceptions, you might wrap your head around the value AFTER the auctions over, also know as WAY TOO LATE.

 

 

Sure, I can see how that works for you.

 

With me, I prefer not to publicize my interests (if nothing else, you're potentially alerting the competition). More a case of bidding up to a figure I can both afford and justify to myself.

[Terry Doyle]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

It was not directed at you more of a general statement based on reading through the thread.

 

For me there's usually more than one piece I like in an auction, if a friend likes a piece more than me I'm more than happy to move on to something else, giving another seller my money.

 

Sorry, I was racking my brains trying to think what I may have said to prompt such a comment!

[suspense39]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

It was not directed at you more of a general statement based on reading through the thread.

 

For me there's usually more than one piece I like in an auction, if a friend likes a piece more than me I'm more than happy to move on to something else, giving another seller my money.

 

Sorry, I was racking my brains trying to think what I may have said to prompt such a comment!

 

Haha!

[comix4fun]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

 

Your clarified point is pretty spot on. Having a random hobby acquaintance come to you to try and clear the field makes you wonder how many people he's asking. It's also a lame- move on any continent.

 

I know if I want to bid on something I tend to compare notes with others to see if my estimates our outdated, or overstated, or right on with others. This hobby has taught me, more than once, that wrapping your head around a potential value ahead of time will help you get a piece of art at a price you might not have considered reasonable in real time as it's being auctioned.

 

Without preparing ahead of time, comparing notes, getting feedback on market perceptions, you might wrap your head around the value AFTER the auctions over, also know as WAY TOO LATE.

 

 

Sure, I can see how that works for you.

 

With me, I prefer not to publicize my interests (if nothing else, you're potentially alerting the competition). More a case of bidding up to a figure I can both afford and justify to myself.

 

 

Well, I don't tell everyone ....that would be hobby suicide with all the "finders fee service" guys, opportunists, carpetbaggers, remoras, and cardiac kids in this hobby.

 

A small circle of trusted and honest people is the main reason I like this hobby so much. The art itself, after all these years, is almost entirely secondary to the relationships I've been able to forge with some of the absolute finest people on the planet. If I wasn't able to discuss what I like, what I am considering, and potential deals, trades, or bids then this hobby wouldn't be worth doing if it was just about the pieces of paper.

 

Simply, there are a handful of people are deeply happy when they see me happy in picking up something meaningful in a deal or an auction and I feel the same for them. That's become increasingly more rare and more valuable in a hobby (in a world really) that seems to inch more and more to a genitalia measuring contest as the dollar values rise.

[comix4fun]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

It was not directed at you more of a general statement based on reading through the thread.

 

For me there's usually more than one piece I like in an auction, if a friend likes a piece more than me I'm more than happy to move on to something else, giving another seller my money.

 

Sorry, I was racking my brains trying to think what I may have said to prompt such a comment!

 

 

Nobody in their right mind takes a shot at Terry Doyle.

 

NOBODY!

[Terry Doyle]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

It was not directed at you more of a general statement based on reading through the thread.

 

For me there's usually more than one piece I like in an auction, if a friend likes a piece more than me I'm more than happy to move on to something else, giving another seller my money.

 

Sorry, I was racking my brains trying to think what I may have said to prompt such a comment!

 

 

Nobody in their right mind takes a shot at Terry Doyle.

 

NOBODY!

 

They don't need to. I can shoot myself in the foot!

[comix4fun]

So if all four of my collecting friends like a piece we all have to bid on it, against each other or else it's collusion.

 

Sounds like you're trying to put words in my mouth.

 

If you want to bid on something, why would you want to compare notes with others, unless sizing-up the opposition?

 

If something comes-up for auction that I'm especially keen on, I give it my best shot. Simple as that.

 

It was not directed at you more of a general statement based on reading through the thread.

 

For me there's usually more than one piece I like in an auction, if a friend likes a piece more than me I'm more than happy to move on to something else, giving another seller my money.

 

Sorry, I was racking my brains trying to think what I may have said to prompt such a comment!

 

 

Nobody in their right mind takes a shot at Terry Doyle.

 

NOBODY!

 

They don't need to. I can shoot myself in the foot!

 

 

They're mostly worried about the ricochet.

[Lucky Baru]

To all who think agreeing before an auction not to bid on a lot I ask the following:

 

If you had a “near-grail cover” that you secretly owned and you placed it at of one the auction houses to be auctioned off would you say anything or do anything if one of the parties in your example called you and advised you not to bid on the piece because either they or one of the other parties in your group was asking everyone not to bid on it to keep the price from being jacked-up?

 

Everyone reading this knows that they would say or do something to change what they were just told in the above example. You would either let the party calling you know that the cover was yours and try to sell it to them outside of the auction (if you could get out of the auction house contract) or you would advise them that you owned it and that what they advised you of wasn’t appreciated. If you couldn’t change their minds would you advise the auction house of the situation or just let it go?

 

After all the only thing different in the above is that YOU OWN the item in question.

 

[Meeley Man]

The only bids that matter are those at the margin, that would affect the final outcome, that create separation from two bidders to a single (winning) bidder.

 

So in an old-school open outcry auction (with a live bidding audience), the auctioneer calls opening at $10k...anyone? And twenty-five hands go up, only two of them matter, as a quantity greater than one is what prompts the auctioneer to raise the bid an increment - in an attempt to create separation. This will go on until the field of bidders drops to two and then separation occurs to a single (winning) bidder. The only bids that matter (whether made or not) are the final two dropping down to one.

 

All of this can be ported to online or mixed bidding audiences as well.

 

My conclusion being that most of what is called collusion is a misnomer as there is no actual impact unless one of the colluders sits in the #2 seat as underbidder, and backs off at that point! I doubt this is the case as most collusion occurs, by definition between parties that are not likely to go all the way anyway..that's why they're asking for or answering with a backoff (basically earlier than usual separation)...they're priced out of anticipated FMV or otherwise less than fully interested to begin with. Big 'ol imo on that last part, of course.

 

The only weakness I see to this argument is the psychological damage reduced overall participation/interest could have on the rest of the bidding audience. Hard to place a gain/loss value on this though.

 

There are an awful lot of assumptions in this rationale. I can't see lowball bidders conspiring with the hope that they'll walk away with a steal. In my experience the talking happens at the top where people know who is likely to bid and win.

 

Regardless, if you take a black-and-white view, it's the same principle as shilling, but occurring from the converse side. You can rationalize it all you want and say that it's not likely to affect outcomes, but it's the same exact principle.

 

No - when you shill bid the buyer is the same guy as the seller (either in name or fact).

 

In bid suppression situations you have separate bona fide buyers and bona fide sellers.

 

More often than not, shilling is intended to bid up a valid buyer, not to have the seller buy back his own stuff. You've been doing this long enough to know that.

 

The outcome in question isn't who wins or who owns it. The outcome is the price paid. From that perspective, which frankly is the only relevant perspective, they're the same thing.

 

Shilling -- one person conspires to elevate a price in their favor.

Collusion -- one person conspires to diminish a price in their favor.

 

Same coin, different sides.

 

We'll agree to disagree. In a shill bidding scenario there is at least one bidder that is acting in bad faith. In bid suppression there is no such bidder.

 

What if the suppression bidder isn't doing so to obtain something on the cheap for themselves, but to hurt or harm the seller offering it, by costing them potential bids on the item?

 

 

[suspense39]

in my small circle we talk about what we think FMV is and it's always the person who's willing to go there or higher that goes after the art, so I don't think that takes money out of anyone's pocket because the ones that are sitting out on the piece wouldn't have gone that high any way.

[comix4fun]

To all who think agreeing before an auction not to bid on a lot I ask the following:

 

If you had a “near-grail cover” that you secretly owned and you placed it at of one the auction houses to be auctioned off would you say anything or do anything if one of the parties in your example called you and advised you not to bid on the piece because either they or one of the other parties in your group was asking everyone not to bid on it to keep the price from being jacked-up?

 

Everyone reading this knows that they would say or do something to change what they were just told in the above example. You would either let the party calling you know that the cover was yours and try to sell it to them outside of the auction (if you could get out of the auction house contract) or you would advise them that you owned it and that what they advised you of wasn’t appreciated. If you couldn’t change their minds would you advise the auction house of the situation or just let it go?

 

After all the only thing different in the above is that YOU OWN the item in question.

 

 

They aren't a close enough friend to be calling me to abstain if they don't know that it's mine.

[buttock]

Here's a concrete example. This is a book I recently won:

 

http://www.ebay.com/itm/HEADLINE-COMICS-11-CGC-7-5-Scarce-High-Grade-Japanese-War-Cover-3rd-highest-/361469500309

 

It went for roughly 30X guide. However, if you look at the bidding history, had I been asked not to bid and stepped out it would have gone for about $1000 less, a reduction of about 30%. How do you think Ted would feel if I cost him $1000 on the sale? How can you rationalize this as ok to do because we're all good-hearted collectors? Do you think Ted would laugh it off because I was doing a buddy a favor?

 

Two things:

 

1. I think you picked a bad example. Unless I'm misreading the bidding history, the underbid was $50 lower not $1,000.

 

2. When you say that the auction ended at 30X guide, where arguably the guide is FMV, who's to say Ted had an expectation, let alone right, to get a dime above the guide? This goes back to an earlier point I made: the potential seller needs to know their market. If there are only two potentially serious bidders, an action may not be the most prudent course of action for them to maximize profits.

 

Yes, the underbid was $50 less, but the second underbidder was almost $1000 less. Had (the winner) not bid, the underbidder doesn't win at his max bid, only the increment above the next underbidder.

 

As to your second point... Jesus Christ man.

 

No that's a misconception. There can be and often are all sorts of snipes in that $1000 dead space that didn't even register as bids due to the snipe being insufficient to place.

 

I'm not interested in ifs and buts. His bid came in 15 seconds AFTER mine, immediately before the auction ended. I can toss out hypotheticals all day also, but the facts are, had I not bid, the auction would have been 30% lower.

[buttock]

The only bids that matter are those at the margin, that would affect the final outcome, that create separation from two bidders to a single (winning) bidder.

 

So in an old-school open outcry auction (with a live bidding audience), the auctioneer calls opening at $10k...anyone? And twenty-five hands go up, only two of them matter, as a quantity greater than one is what prompts the auctioneer to raise the bid an increment - in an attempt to create separation. This will go on until the field of bidders drops to two and then separation occurs to a single (winning) bidder. The only bids that matter (whether made or not) are the final two dropping down to one.

 

All of this can be ported to online or mixed bidding audiences as well.

 

My conclusion being that most of what is called collusion is a misnomer as there is no actual impact unless one of the colluders sits in the #2 seat as underbidder, and backs off at that point! I doubt this is the case as most collusion occurs, by definition between parties that are not likely to go all the way anyway..that's why they're asking for or answering with a backoff (basically earlier than usual separation)...they're priced out of anticipated FMV or otherwise less than fully interested to begin with. Big 'ol imo on that last part, of course.

 

The only weakness I see to this argument is the psychological damage reduced overall participation/interest could have on the rest of the bidding audience. Hard to place a gain/loss value on this though.

 

There are an awful lot of assumptions in this rationale. I can't see lowball bidders conspiring with the hope that they'll walk away with a steal. In my experience the talking happens at the top where people know who is likely to bid and win.

 

Regardless, if you take a black-and-white view, it's the same principle as shilling, but occurring from the converse side. You can rationalize it all you want and say that it's not likely to affect outcomes, but it's the same exact principle.

 

No - when you shill bid the buyer is the same guy as the seller (either in name or fact).

 

In bid suppression situations you have separate bona fide buyers and bona fide sellers.

 

More often than not, shilling is intended to bid up a valid buyer, not to have the seller buy back his own stuff. You've been doing this long enough to know that.

 

The outcome in question isn't who wins or who owns it. The outcome is the price paid. From that perspective, which frankly is the only relevant perspective, they're the same thing.

 

Shilling -- one person conspires to elevate a price in their favor.

Collusion -- one person conspires to diminish a price in their favor.

 

Same coin, different sides.

 

We'll agree to disagree. In a shill bidding scenario there is at least one bidder that is acting in bad faith. In bid suppression there is no such bidder. All parties to the bidding are legit.

 

Yes, there is such a bidder. It's the one who agreed not to bid. That's acting in bad faith. You are potentially causing the seller to lose money on the sale.

 

I think the lack of inducement is the difference between good and bad act. For shilling, there is inducement. Using Mike as an example, if you bid it up to a certain amount, I will buy it back off you. But with asking someone not to bid, there is no inducement. It's "Hey man, can you do me a favor, and stay out of this auction? I am dying to get this piece." is very different from "If you stay out of this auction I will give you a free comic book".

 

That assumes the shiller is buying it back. In the Mastro case, of which there were something like 30 some-odd pages of data, were they buying it back? And your examples don't illustrate inducement as you're defining it (not a legal guy, so I'm going with what you say). The shill bidder has a zero-risk situation since it's being bought back, right? Or am I not understanding inducement?

[buttock]

Here's a concrete example. This is a book I recently won:

 

http://www.ebay.com/itm/HEADLINE-COMICS-11-CGC-7-5-Scarce-High-Grade-Japanese-War-Cover-3rd-highest-/361469500309

 

It went for roughly 30X guide. However, if you look at the bidding history, had I been asked not to bid and stepped out it would have gone for about $1000 less, a reduction of about 30%. How do you think Ted would feel if I cost him $1000 on the sale? How can you rationalize this as ok to do because we're all good-hearted collectors? Do you think Ted would laugh it off because I was doing a buddy a favor?

 

First, who's to say that the ending price was FMV? Seems to me like the actual FMV is lower and that you and the winner cost each other a lot of money.

 

Second, who's to say that there wasn't someone willing to pay in-between you and the 2nd underbidder? Someone could have sniped 3 or 4 seconds before the end and didn't have their bid recorded because you and the winner had already pushed the price up beyond his max.

 

Third, nothing against Ted, but, why is he entitled to this $1,000? If, hypothetically, the winner was a friend and he asked you to back down because it was a Grail book, and you didn't because it somehow violated your ethical principles, well, you probably just cost him an extra grand, which I view as treacherous and unethical whereas you not bidding I don't consider to have any ethical implications at all.

 

Of course, I'm not talking about feeling guilted into standing down, or standing down on a piece you want equally or more, etc. as someone suggested. No one is talking about situations like those - of course in most situations you just let the chips fall where they may. I have bid on thousands of lots at auction and the number of lots where there was coordination with anyone else is a minuscule percentage.

 

FMV on that book is closer to $5-6K. Fortunately for me, 3 of the most interested parties had eyes elsewhere without any collusion. My bid was substantially higher.

 

But to continue with your argument, you wouldn't be upset if you consigned a piece you valued at $50K, it finishes at $35K, and you find out later that bidders you anticipated bidding it up higher declined to bid so that one of their buddies could get it on the cheap? That seems unlikely.

[ThothAmon]

I've got a real problem with the idea that someone could be charged criminally for agreeing not to do something he otherwise has no obligation to do. Especially, if the market contains more than two players. How is the seller harmed when, if the negotiation is arms length, they agree to sell for the offered price? They have no obligation to sell and can refuse if the offered price is not satisfactory. Whether it is comics or leaseholds in Oklahoma for natural gas I think its a scary time when our government is criminally prosecuting individuals for agreeing not to do something they have no legal obligation to do.

[Brian Peck]

There are alot of reason people may or may not bid on artwork. Family emergency, no money, auction is during work hours or you just plain forgot. No one knows how many people will bid on a piece, if you want a FMV they post it for sale at a price. Auctions are where people hope it could go for more having multiple bidders fighting over a piece. Auctions are just like gambling, you win some and lose some.

[Bird]

The benefit of not bidding is having others return the favor later on down the road. The reward may not be as tangible as a free comic but this is surely a quid pro quo type of syndicate going on here, no? The reward is much more valuable than a free comic. You take the Kane. You take the Kirby. You take Big John. And I'll take the Everett! Then you each go out and protect those pieces, contact the n00bs and collude by pretending to like that other stuff while they lay off our pieces. We'll get them for pennies I tell you!

 

(If they bust someone for this, jaybuck43 is my legal counsel of choice.)

 

 

[Bird]

There are alot of reason people may or may not bid on artwork. Family emergency, no money, auction is during work hours or you just plain forgot. No one knows how many people will bid on a piece, if you want a FMV they post it for sale at a price. Auctions are where people hope it could go for more having multiple bidders fighting over a piece. Auctions are just like gambling, you win some and lose some.

 

BING! As a seller I tend to loose more than I win but them's the breaks on pieces worth less than $1000!

 

More than that...RESERVE AUCTION!

 

But that is a different conversation, protecting against collusion.

 

 

[rotembk]

What if the suppression bidder isn't doing so to obtain something on the cheap for themselves, but to hurt or harm the seller offering it, by costing them potential bids on the item?

 

 

James, your scenario is highly unlikely because it can happen only if that person either (i) can actually prevent everybody else from bidding or (ii) is the only other interested bidder (out of a pool of two) but then you presuppose that they were required to bid to begin with, which, sorry to sound like a broken record, has no moral or legal basis even if the person has malicious intent.

 

But I will agree that if somehow (i) were to happen, that could rise to the level of fraud.

[wombat]

Me and my buddy are going to bid on items in an auction. We both like multiple pieces, but can only afford a few. And we would be equally happy with many of the items. Seems like common sense to not go after the same pieces.