It's called shill bidding and it is illegal. Not only eBay illegal, but illegal anywhere.
The first thing to remember about a shill bidder is that he does not want to win. If you are constantly being outbid by another bidder (even if it appears to be the same bidder everytime), then he is probably not a shill.
A shill will bid until he had outbid you , then retract his bid, leaving you as the winning bidder, at a higher price than you would have paid if he had not been bidding.
There are two actions to take.
Against shilling, REPORT the suspect auction. EBay will not tell you what action they take, because most of these reports are either mistaken or mischievous, but your report will put the seller on their radar.
To win, bid once, bid your maximum and bid late, preferably in the last minutes of the auction which does not give a shiller time to act.
