I have a client who was recently complaining how his competitors were ranking higher for his business name than he was. Primarily this was because his competitors try to pass themselves off as my client's business, because he has the best reputation. Anyway, we noticed that with another site, where we were linking to lots of other websites, it had great search engine position. So we experimented.
We linked to his competitors from his own website - using their business names of course! The whole idea was check out what our competitors are offering and then come back and talk to us, because we're the best.
Well, it worked. This seemed to be the final straw that pushed my client ahead of the competition.
Why I think this worked? Search Engines give a certain emphasis to authoritive pages. By being a particular sort of company, and linking to other companies in the same industry, in the same city, I think search engines saw my clients website as an authoritive website over other sites, and so the best one to visit first.
Of course, this whole linking thing could have backfired. First, you can't just link to any website. You need to specifically link to websites about the same subject. Next you should probably watch out for sites that might be considered shady by search engines. Linking to them might be the same as giving your site minus points.
Finally the linking thing could add link power to the other websites, which might ultimately bring those sites back on top.
I think if my clients competitors wanted to weaken his strategy they should adopt the same policy and offer reciprocal links back. Then my clients one way links would not be as strong.
There is also a second benefit not connected to SEO but to reputation. By linking to another company, you are showing that you are aware of the industry. By linking to a good article by a competitor, you are showing that you subscribe to the same thinking. Provided you have a point of difference to your competitors, linking to them has more than one benefit.
Question is: Do you have the guts to do this on your website?
By the way, I think SEO is a mugs game. I've found that by keeping certain SEO principles in mind and then focusing on your own website, rather than your search engine position, that you get better results.
I'm not saying ignore your search engine position. I'm saying spend more time improving your website for your visitors, and you will find your search ranking naturally improves.