The merit order dispatch of generating units in a Competitive Power Pool or Power Exchange can be considered as an auction. The use of a nondiscrimination auction that pays all winning bidders at a uniform price is consistent with the incentives for cost-revealing bids by market participants. This paper examines whether the non-discriminating feature of an auction is possible when transmission constraints are considered under a framework of location dependent nodal spot pricing. The paper illustrates arbitrage opportunities that can result in strategic behavior by bidders under such a system.