diff --git a/abci/abci.go b/abci/abci.go
index 3c39164..bf47d84 100644
--- a/abci/abci.go
+++ b/abci/abci.go
@@ -141,6 +141,18 @@ func (h *ProposalHandler) PrepareProposalHandler() sdk.PrepareProposalHandler {
 		for ; iterator != nil; iterator = iterator.Next() {
 			memTx := iterator.Tx()
 
+			// We've already selected the highest bid transaction, so we can skip
+			// all other auction transactions.
+			isAuctionTx, err := h.isAuctionTx(memTx)
+			if err != nil {
+				txsToRemove[memTx] = struct{}{}
+				continue selectTxLoop
+			}
+
+			if isAuctionTx {
+				continue selectTxLoop
+			}
+
 			txBz, err := h.txVerifier.PrepareProposalVerifyTx(memTx)
 			if err != nil {
 				txsToRemove[memTx] = struct{}{}
@@ -216,3 +228,12 @@ func (h *ProposalHandler) RemoveTx(tx sdk.Tx) {
 		panic(fmt.Errorf("failed to remove invalid transaction from the mempool: %w", err))
 	}
 }
+
+func (h *ProposalHandler) isAuctionTx(tx sdk.Tx) (bool, error) {
+	msgAuctionBid, err := mempool.GetMsgAuctionBidFromTx(tx)
+	if err != nil {
+		return false, err
+	}
+
+	return msgAuctionBid != nil, nil
+}
diff --git a/abci/abci_test.go b/abci/abci_test.go
index 4dd237e..de46bb9 100644
--- a/abci/abci_test.go
+++ b/abci/abci_test.go
@@ -350,7 +350,7 @@ func (suite *ABCITestSuite) TestPrepareProposal() {
 				insertRefTxs = false
 			},
 			4,
-			1,
+			10,
 			true,
 		},
 		{
@@ -362,7 +362,7 @@ func (suite *ABCITestSuite) TestPrepareProposal() {
 				insertRefTxs = true
 			},
 			31,
-			31,
+			40,
 			true,
 		},
 		{
@@ -470,7 +470,7 @@ func (suite *ABCITestSuite) TestPrepareProposal() {
 				insertRefTxs = true
 			},
 			201,
-			201,
+			300,
 			true,
 		},
 	}