Collusion refers to bidders communicating with each other without the knowledge of the auctioneer in order to obtain an auction outcome more favourable to them. While explicit collusion is commonly prohibited by law, it can be observed in real-world applications that bidders succeed to circumvent the law by implicit collusion, i.e. by communicating via hidden clues.

A famous example of implicit collusion is the auction for telecommunication licenses in Germany in 1999, where bidders succeeded to communicate via number combinations in their bids: “Vodafone–Mannesman ended a number of its bids with the digit “6” which, it was thought, was a signal that its preference was to end the auction quickly with six remaining bidders.”

Klemperer, P., 2002a: How (not) to run auctions: The European 3G telecom auctions. European Economic Review 46, pp. 829-845.
Klemperer, P., 2002b: What really matters in auction design. Journal of Economic Perspectives, Vol. 16, No. 1, pp. 169-189.