Yes, two companies can operate with names that differ by one letter.

A chemicals company has been found to have engaged in reverse domain name hijacking over the domain name sichem.com.
Sipchem Europe S.A. is part of the Saudi International Petrochemical Company (Sipchem), founded in 1999.
The company filed a cybersquatting dispute with World Intellectual Property Organization (WIPO), complaining that vanBaerle Management AG was cybersquatting with the domain name.
Earlier this year, vanBaerle Management AG needed to set up a new operating company. One of the family members of the company ownership had set up a holding company called Sichem Holding AG in 1995, so it decided to use that name.
In March, the Respondent acquired sichem.com. (NameBio shows it paid $4,777 to purchase the domain through Sedo.)
When the case was filed in July, the Respondent had already set up a site for its business on the domain.
WIPO panelist Tobias Zuberbühler determined (pdf) that Sipchem did not show that the domain owner lacked rights or legitimate interests in the domain, nor did it show it was registered and used in bad faith.
He found this was a case of reverse domain name hijacking:
In the present case, a look at the website connected with the disputed domain name could have indicated that the Respondent was running a legitimate business (in a distinct and separate field of the chemical industry) without targeting the Complainant. A check of the Commercial Registry at the Respondent’s domicile would have revealed that the company “Sichem Holding AG” had been registered since 1995, four years before the Complainant was established in 1999 and long before the SIPCHEM trademark was registered in 2016.
Against this background, the Panel finds that the Complainant has engaged in an attempt of RDNH.
Watson Farley & Williams represented the Complainant, and BOHEST AG represented the domain name owner.




BUT surely that is a Trademark matter NOT a UDRP matter ?.
You’re correct, any beef the Complainant has would be a trademark issue, not cybersquatting
What is the punishment for a rdnh?
With only one letter difference between the domains (and that letter in the middle of the word) this article is hard to follow. It would seem an honest mistake and the solution should be that each company have a link to the other domain in the case of user error.