I try to be respectful of other legit lcos. Business is business though and if it is was a service issue I would take the account. On the hand you will be mowing next to these guys for years to come.
I had a similar situation last year where I turned away a good customer. I have 8 yards on this one particular street. A lady in between 2 of the houses I do wanted me to mow her yard. I know the guy who mows her yard currently. She said it made sense for me to mow since I was already mowing all of her neighbors. She said there were no service issues at all. I declined the yard, and she understood. I have had these 8 yards for years and this guy has been mowing this yard for awhile also. He has never once has approached any of my 8 customers on that street. The guy even has offered me some business in the past on some smaller yards he did not want. I did not take him up on the offer but it was still a nice gesture. As I get older I realize it is easier to get along with people than not. Although I am a solo operator with limited slots to fill also. If I was trying to now the world I would of taken it. Every situation is unique.
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