Funny. In all the years playing FF, I have never experienced this.
Part of me wants to applaud them on their creativity, especially since it is has been *presumably* done within the parameters of the league settings. I mean, they're not cheating if you never made a point of outlawing it. I have a hard time calling it "collusion" then, as their agreement is not technically been done to accomplish something "illegal." I would have to say that you allow it (begrudgingly - let them know how you feel), and then make it a precedent-setting event. Next year, no way.