It’s Dominant to Collude
The ACM SIGecom Exchanges Newsletter published an article by Morteza Zadimoghaddam from MIT, and Microsoft Researchers Yoram Bachrach and Peter Key about how although truthful bidding is a dominant strategy in a VCG Auction, this is not always the case when bidders begin to collude. This article specifically looks at the scenario when multiple bidders are bidding on identical units where the bidders always value having more units as much if not more than having less due to free disposal of these units
This article reveals how a group of bidders can collude such that one proxy agent obtains all of the units that the group desires. Because VCG auctions price a unit according to the harm it does to the other bidders, the members of the group bid such that there is very little harm done unto them so that the proxy agent pays a small price for the units. This proxy agent is then able to distribute the units for an agreed upon price to the group such that those in the group pay less than if they had all bought the same number of units bidding competitively against each other.
http://www.sigecom.org/exchanges/volume_10/1/BACHRACH.pdf