netmeg - 7:54 pm on Aug 8, 2011 (gmt 0)
I don't know about the rules in NZ; here in the US there's no rule against that as far as I know. I target ads on my client's competitor's domain names, and they target ads on ours.
The best way to fight it is to make an ad for yourself and say (essentially) Hey, you, over here - this is REAL site, this is the one you want, everyone else advertising for this domain is a fake.
You should be able to beat them on quality score, so it shouldn't cost too much; I *always* advocate bidding on your own brand and domain keywords anyway because they tend to be real performers (even if you already have the top organics) and it gives you a chance to stick it to the competition (if you're of that bent - I for one, am.)