I deal with competition in a couple of ways first of all i try to have faster and better ways of canceling/posting (check the qa3 posts), in this way i will win the cancel and posting race because i will be able to cancel and post new auctions faster then they will. This will lead to me having the cheapest item up most of the time. You can also try to starve your competition by going under the mats price. Because i buy so much epic gems i often get a cheaper price for the raw gems then normal people do this gives me an advantage of price. Another way is to drive you competition really low in the market then buy him all up and repost his items for more. The problem with this is that if he can create more of the item and he is still making profit of them when you buy them up, he will keep posting and sooner or later you will run out of money. You can also add the person to your friends list and only undercut when he/she is offline.
So what is the best tactic? You will have to analyze the person that's undercuting you. What addons are he using how fast is he,when is he online, how many of the item dose he have? and from these questions ably the tactic you think will work the best !
Hope you can use this post to get rid of your competition and good luck with the auctioneering. If you have any problems give me a whisper and i will try to help you
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