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A 301 is counted by google as a link, both John Muller and Matt Cutts said that few times. So it's just a link. But since it's from a competitor domain, it is potentially a very powerful link, because google algo is believed to value links from websites within your topic/business/field much more than just any link. And I have seen that work that way with my eyes a couple of times. "Potentially", because of course it does depends on many factors, like that competitor metrics, such as DA/MT/TF/etc... If the competitor domain is well established, I wouldn't worry too much about the redirect being flag as manipulative by search engines. Of course if it's the best choice to 301 the root, 301 with some logic, or keep the website online as it is... Depends on many other factors, not all SEO related.