Search Engine Marketing Conquest Advertising; Unethical Business Practice or Dealership Gorilla Marketing?

I received the following query from an ADM member and would like to
get other ADM Community members to weigh in on this issue. I have
changed the names so the ADM member who sent it to me is kept
confidential, and would not compromize the answers, or his privacy.
Because I know there are probably several professionals who will
disagree with my response, I wanted to make sure that this dealer gets
the benefit of opposing opinions...

"Ralph,
Just a quick question... I have a competitor that purchased a keyword
phrase with my dealer's name in it. The phrase was "John Smith Used
Cars".
Is this unethical, illegal or just "gorilla" marketing?
Is there anything I can do to prevent it or do I just have to deal with
it?
Any feedback would be greatly appreciated.
Thanks in advance,
An ADM Community Member"

My Response:
If the competitor is running an ad that clearly identifies that the ad
is from his dealership, and is not implying that the ad is from your
store, and... he is basically bidding on your store's name as a search
query (keyword bid) not only is this ethical, it is probably a best
practice... Especially if his ad is unique to those who search for your
dealership and says something like:
Beat ADM Motors Pricing
Before You Buy, Compare Our Low
Prices and You Will Save Thousands
www.PagliaMotors.comDepending
on many different factors, the campaign may or may not pay off for your
competitor. But in any case, since he is bidding on your name and his
landing page is not one of yours, he will have a low quality score in
most cases. I am running conquest campaigns right now for CardinaleWay
Mazda in Mesa, AZ and they work great when bidding on 3 of their 5
competitors, but the 2 it is not working on, it is not working at all!
What would make the practice unethical is if the advertisement and/or
the landing page it points to is deceptive or tries to trick customers
looking for your dealership into clicking on the competitor's ad...
But, when this is being done it usually hurts the store with the
deceptive ad more than it helps them. For example I have seen ads like:
Courtesy Chevrolet PHX
Official GM Request For Quote
Get Discount Pricing on All Chevys
www.CourtesyChevyArizona.comThe
domain was purchased by Xxxxxx Chevrolet and pointed to a "Pharming
Site" that misled the consumer into thinking it was from the real
Courtesy Chevrolet... And drove me crazy as well!
In another example of Xxxxxx Chevrolet dirty tricks, they purchased a
Courtesy Chevy domain and pointed it to their Xxxxxx Chevrolet Quick
Quote page inside the LMA website for the Valley Chevy Dealers, which
does not say the lead is going to Xxxxxx Chevrolet...
Those two examples are REAL dirty tricks and unethical, but what I
think you are describing is simply an example of a dealer being
aggressive, but not deceptive or misleading.
*********************************************************************************************
So here's my Forum discussion question... When and what specific
types of actions with search engine advertising do you consider
unethical or immoral business practices?