It’s a live auction — so things are being sold by sellers to buyers via an auctioneer who is taking bids and denoting, “Sold!” So what about other such deals taking place during or post auction?
There are possibly two different types of situations here:
- Sellers and buyers consummating deals during/after the auction with property sold at the auction.
- Sellers and buyers consummating deals during/after the auction with property brought to the auction, but not sold in the auction.
For instance, Bob buys a tool box at the auction and then walks over to several other people offering to sell particular tools to them directly. Or, Bob brings a tool box from home and approaches people at the auction about buying some of his tools.
Some auctioneers seem to say that “any deal” that takes place on their property (or at that auction site) will be charged commission, and other auctioneers are saying it’s essentially fine for this to take place. It seems to us regardless of profit to the auctioneer, that such behavior would constitute — or likely lead to — collusion.
Collusion could involve bidders agreeing to “not bid against” each other to then divide up the property later for self enrichment. Collusion generally is as follows:
An agreement, usually illegal and therefore secretive, which occurs between two or more persons to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage.
For more reading about collusion at auction, here is one of our treatises on that subject: https://mikebrandlyauctioneer.wordpress.com/2010/05/14/what-is-collusion-at-an-auction/.
Bob’s tools — whether or not he bought them at the auction, or brought them to the auction — would likely distract bidders and/or cause less bidding on the auction’s other tools. Further, if Bob and these bidders conspired not to bid against each other or not bid otherwise, that would likely be collusion.
It seems the marketing and promotion that the seller/auctioneer paid for should be used for the benefit of the auctioneer/seller — and not others trying to take personal advantage of that advertising in this fashion.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.