httpwebwitch - 1:11 pm on Apr 29, 2012 (gmt 0)
Honest question: do you feel that what the competitor has done is unethical?
If so, are you willing to do what they have done, but better, as Leosghost suggested?
If you're thinking "I wish I'd thought of that / done that first", you have to acknowledge that your competitor is playing the game better than you. SEO is a vicious sport, the rules aren't stated in advance, and the only referee is a mysterious algorithm and a judge named Cutts.
Shilling, Sock Puppetry, & Deliberate omission of bias is a common tactic in marketing, it's how people get ahead in advertising. If a company does it blatantly and gets called out in the media, it can be a PR embarrassment (because it IS unethical). But consider how many lobbyist groups and certification organizations only exist to say "so-and-so independent research org says that product X is healthy", not divulging that 100% of the operating budget of so-and-so is sponsored by Company X.
see what I mean?