Since May 2008, Google UK has allowed companies to bid on other trademarks (although it claims it doesn't 'encourage' it). This was a reversing of their previous policy, where this was prevented by providing proof of your company trademark directly to them. This brought Google UK's policy into line with that of Google USA and Canada.
Now, this did start an intial flurry of Pay Per Click (PPC) advertising last Spring, with British companies suddenly fearing that their competitors would buy placements for their trademarks. However this paranoid has subsided somewhat, especially when Google stated that they would not allow trademarks to be displayed in the ad text.
But that's not the full story... 'Yes', you can bid on a competitors trademark term and 'no' you may not stick their trademark in the advert copy you display. But you can put the competitors name into your URL and display that at the bottom of your advert.
Therefore, the following PPC advert is NOT allowed:
competitor trademark
competitor trademark
competitor trademark
www.your_company_url.com
...but the following one IS:
Advert copy
More advert copy
Even more copy
www.your_company_url.com/competitor
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