So he's basically asking for you two to set up a pricing cartel? Check first whether that's even legal in your country. I'd also ignore the mail, and if you're feeling particularly evil, do exactly what he asks you not to do :)
A couple decades ago I gad a girlfriend who made tie-dye t-shirts and I'd often accompany her to shows and festivals. At one festival she left me to mind her booth. I didn't want to do it and I certainly didn't want to do any work in the hot sun.
So I changed her sign from $15 to $35 and sat in the shade.
But my scam backfired and I moved far more shirts at more than double the price than we ever did at the lower price.
What does that have to do with OP's question? Dunno. But maybe the competitor is actually trying to be helpful rather than being evil.