I don't understand, I have 1 competitor who has 4 websites and they all share links between the 4 sites, so passing on PR, using anchor text from PR pages! I have reported them to Google over 1 month ago and nothing as happened... So is Google playing by it's own rules? Surely they can track who owns the domains and the only reason they are higher in the SERPs is due to the link sharing! Any ideas?
Well i think Google should put some plenty on you competitor as Google is against reciprocal linking.
Interlinking sites up to a number is permitted by Google. It is if you have thousands of sites inter-linking when Google gets serious. So your competitor is doing nothing illegal. You should do better on working on your own site rather than crying foul over your competitor. Imagine a big - company that can afford few hundred thousand bucks on online advertisement. They just buy 2000 related domains - sets-up medium quality sites related to their niche and all of them point to their main portal. This is called manipulation and Google is against those type of practices.