alexsel - 8:00 pm on Aug 8, 2011 (gmt 0)
That's interesting. Generally speaking, competitors ads get placed on the right hand side because Google do not deem them relevant. Bidding on other companies domains rarely give you a relevancy score/quality score higher than 3-4, thus you're positioned on the right hand side regardless how high the bid is.
I'm going to make a qualified guess and say that the domain is specific to the industry, perhaps has the location or business category in url. Although this is a great domain, sometimes it means competitors can bid on similar keywords and appear on your domain search, with a fairly solid quality score. Your competitor must have a QS of 6 and up to appear above search results.
You'd probably prefer to stay out of bidding on your client's domain. In this case, however, it would be in your best interest to do so. The good news is that your CPCs will be minimal.