I think its a free market and if Random Player # 4907 wants to sell the same fish as you for 1/10th the price, he has every right to do so. Is it stupid? Yep. Is it annoying? Yep. Is there anything likely to be done about it? Nope!

And no, I don't think extreme undercutting should get someone banned. What you consider 'extreme' might not be a big deal to them, and banning someone for posting an auction is just.. well its as dumb as the undercutting itself.