What do you think of this ???

[302 XC]

So for 20 years ive known this , well so called mate
He has over the years helped me in my business venture, stayed at my house for weeks at a time,helped out here and there,for that i kindly donated many many items to his disabled brother to help his life more enjoyable,supplied anything ol mate needed, the grog tab , heaps lets say
This so called friend was working for me full time not 2 years ago, he has just ventured into a retail business selling things along the lines i make
He refuses to buy of my as i wont sell at cost price and deliver for free , he is 1 hour away

Ive just found out he is goin to my customers and baggin me out

Now ive a few things running around the ol brain
Do i confront him, with a possible police presence, someone getting a serious sore head and someone getting arressted
(Missus doesnt like that idea)
Do i , whats called, cut his legs of, its a term used meaning to undercut him severly and push him outta business
I manufacture , ol mate buys from everyone but us, so my bottom line is alot less than his purchase price
I know business is tuff out there at the moment, but as hard as it is, you dont ethically stab ya mates in the back

What would you do ???

Edit :
The 20 year friendship/mateship is over, its a matter of principal now