I'm going to add my 2 cents here and see what your guys' thoughts are.
What if....
You signed up for an account with the same hosting company as your competitor, and then requested/bought a static IP in the same block as your competitor, preferably a +/- in the host octet, Example:
Competitors IP: 216.87.34.131
Your requested IP: 216.87.34.231
After you've managed to grab an IP in the same class as your competitor, write a few scripts to go out and spam the crap out of various known Google domains with 'one-off' keywords relating to your/competitors niche (IE* your niche is "used cars" your one-off spamming keywords are "used cars porn", etc)
After a while Google sees your spamming efforts and references your similar niches/keywords with you and your competitors IP's and determines you and your competitor are the same person, therefore punishing "you" (your comp) for spam. Maybe throw some dupe content or mirror some of your comps pages to add to the chaos.
Just an idea...its been a late night though so I may be talking out of my ass... if having mulitple (auto)blogs on the same IP block can hurt you I don't see how this wouldn't work to
some degree.
What are your thoughts?