I believe you can disable embedding for your own videos within youtube, so that would put a stop to it straight away.
Anyway, regardless of legality, I think it's a bad idea for you to do this. Seriously, what do you think your potential customers will think when they see you embedding videos from your competitors? At best, they'll assume your competitor is the 'go to' guy, while you are just some affiliate.
Why not make your own video?