This is pretty normal, especially when their are lots of rival companies doing the same thing. I used to work for a food ordering company and they felt they had no choice but to advertise their own name as rivals were using their brand name as a keyword. It wasn't cheap either, some weeks it could be as much as a few hundred euro.

Personally, I feel it crosses am ethical line. As a customer if I search for foo.bar and the first couple of result are for rival companies then Google isn't providing me with the service it claims it would. And as a business I would be forced to effectively double spend. Firstly, I would be spending time and effort on SEO to get to the top of the rankings, and then spent again to get to the top of the adverts that are obfuscating the real search results.

I know Google is a for-profit company operating in a free economy, but they still have to be ethical in what they do.