Nobody said it was shill bidding, but it certainly could be. It's dead simple to set a shill max bid at the seller's reserve price, making it so the shill will automatically slightly outbid anyone up to that price and ending with a no sale if the 'reserve' isn't met.
But I'm more concerned that he canceled the 'duo lot' for seemingly no reason and has multiple feedbacks where he refused to ship something honestly won and paid for. I'd definitely be leery of buying from this guy.
As for why he didn't go with the second place winner, it's because he'd have to be willing to settle for far less money for the first two lots ($432.23 less on the Splatterhouse etc. lot and $172.50 less on the Riot Zone etc. lot), though the third lot would presumably sell to the sniper for a mere $5 less.
