I have always been an employee. But I do understand business. As an employee I have never had the concerns that troubled my employers e.g. investing their own money in the business. Also my income was certain. Life for a businessperson is not so cosy. Billy Butlin told one of my friends that every evening he had to go home and think about his business.
I don't think that Pauline has been unreasonable. Competition should be fair. Tony Blair would probably have said "transparent".
My grandmother was ruthless in dealing with her competitors. In fact competition with her business on price was not allowed! Other businesses have also attempted to eradicate rivals. This why America has the Anti-Trust laws.

My personal assessment is that Pauline has given Il Mirto a lot of free publicity! In fact I may pop in both establishments. To illustrate how this works I share the following:-
I once served a High Court writ on a film producer and he said "Oh good! Free publicity! Come in and have a drink and watch the film!"