Part 1
The keyword and the ad text are two different rules
Google’s trademark policy does not restrict the use of trademarks as keywords. It does restrict trademarks in ad text, and the trademark owner can complain about ad text that uses their mark. So bidding on the name is allowed, and writing their name into your headline usually is not.
Do this: Keep competitor names in your keyword list and out of your ad copy. That single rule avoids most complaints.
Part 2
It is usually your most expensive traffic
Someone searching a competitor by name has already chosen. The brand owner ranks first for free, has the strongest quality signals for that term, and pays little. You pay a lot to be second on a search where the person is looking for somebody else.
Do this: Measure this campaign separately from day one. Mixed into a general campaign it hides its own cost.
Halfway, and free
Part 3
The retaliation is real and it is symmetric
They can bid on your name the same day. If their customers are worth more than yours, that trade goes badly for you, and both of you end up paying for traffic that used to be free.
Do this: Before starting, ask what happens if they do it back to you tomorrow, and whether you can afford it.
Part 4
Where it does work
When the competitor has visibly poor service, when you have a specific documented advantage, or when they are leaving a market. In those cases the landing page has to do the whole job of the comparison, honestly and without naming them in the ad.
Do this: Build a real comparison page first. Without it, the click has nowhere to land and you have paid for nothing.
This is teaching material and our own reading of public documentation, not advice for your specific account. Check anything important with your own specialist before you act on it.