Ebay doesn't allow affiliates to bid on their trademarked terms - 'ebay' obviously being one of these. Google upholds this.
(2) eBay Trademarks. You will not use in your domain name or URL (specifically, any term before the third "/" of your URL) nor purchase or register in any search, referral, or advertising service (such as Ask.com's "Sponsored Listings" keyword program) any of the following terms:1.
Any domestic or international eBay company trademarks, and all translations thereof, including "eBay", "PayPal", "Half" or any URL or keyword string that includes eBay company names (for example, "www.yourcompany-ebay.com", "eBay auctions", "eBaymotors", "ebay motors", "eBay jewelry", "PayPalpayments", "paypal payments", "Halfitems", "Half items"); or2. Variations of any eBay company trademarks (for example, "e-bay", "ebay.com", "www.ebay.com", "e.bay", "e bay", "www.ebay", "ww.ebay.com", "e-bay.com", "www,ebay.com", "e.bay", "wwwebay.com", "ebya", "eaby", "Pay-Pal", "Pay Pal", "Half.com", "Half com", "Half.ebay.com", "Half ebay com", "ebay half").
* Please note: this is not an exhaustive list of prohibited words, phrases, or combinations thereof.
Also, do not try direct linking ppc traffic to ebay.com (ebay U.S.)
a. Search Engines. You will not be compensated for paid search traffic purchased from Google.com, Yahoo.com, MSN.com, nor from any of their content networks, such as Google AdSense, Yahoo! Publisher Network, and MSN ContentAds, if it is linked directly to the eBay.com, eBay Express, or eBay Store domains (not "Commission Earning Activity"). The change in policy is limited to the eBay.com US program, and to the three search engines stated above. Linking to a non eBay domain is allowed.
Hope this helps clear things up for you.
Incidentally, if you want to know if that other ad you can see is being charged more than your ad, why not try (while paused) creating a copycat ad in your account? Google will tell you what min cpc you would be charged. It will be completely different to their min cpc due to account history etc, but it will tell you whether their ad and landing page has a better QS than your ad and landing page.
They may well be spending £5 per click....