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Example Scenario: A close competitor has their own website: example.co.uk but has not registered example.com, so example.com if freely available.

Put aside any ambitions of 'easy' / blackhat SEO benefits (such as discussed and disapproved in Can I register and redirect a domain that is similar to my competitors to my site to rank when people search for my competitor? ), my question is different.

It could very reasonably be expected that some (many) customers may type example.com (ie the unregistered domain) instead of example.co.uk, the live domain.

At the moment those potential customers end up on a hosting company page offering the as yet unregistered domain coke.com for sale.

Would it be a good strategy, and legal, if we registered that domain and instead redirected potential customers to our website which sells similar products?

Assume the unregistered example.com has been checked and has no adverse history in terms of SEO. In fact, it has never been registered before.

Would this action simply be good business acumen to take competitive advantage of a piece of online real estate that the competitor has - to be frank rather poorly - failed to grab for himself?

I accept that customers typing example.com (and expecting to land at example.co.uk) may be a little surprised/dismayed to end up at our website. However, surely that's better than ending up at a domain hosting company telling you the URL doesn't have a website and is available for sale.

Especially if our website had a brief pop up saying something like

Sorry, example.com was not a live website, so we've grabbed it and are taking you to here instead to hopefully quench your desires!

The domain name is simple words, not a trademarked phrase, Eg. "BestShoesInLondon".