Link Exchange Question

Hello,
If there is a company that has 4 companies and each company lists their partner sites on the home page of the respective company-- does Google frown upon that link exchange? What can happen to the rankings of that site?

For Example
petfood.com lists: cat.com, dog.com, bird.com

and,
cat.com lists: petfood.com, dog.com and bird.com
and,

bird.com lists: cat.com, petfood.com and dog.com

Will those sites be penalized for this seo effort?

Thank you,
AG

As far as I am aware google wouldn't acknowledge it so it wouldn't do anything to the rankings they would just pass it by, and I don't think you would get penalized for it.