How to react in an interview when asked why I did not apply for a competitor?

Question

I am holding a scholarship right now that is co-founded by a company (say company A). In an interview I had recently with a competitor of this company (say company B), the interviewer asked my why I decided against applying for company A, given that I already know them from by scholarship, and for the one where I had the interview instead, i.e. company B.

I said something about the reputation of company B being better and that people I know who work in the field recommended me to apply for that one rather than the one that co-founds my scholarship. However, I was really unsure whether this was an appropriate answer. Since I might run into this/a similar situation again, I would like to ask what an appropriate response to such a questions would be in the following situations:

1. If I did indeed not apply for company A, for whatever reason.
2. If I did apply for company A, but ended up declining their offer.
3. If I did apply for company A, but got a rejection.

EDIT: I edited the post in order the clarify which company was which

Answer 1

Any polite reply is an appropriate reply. You don't owe them any explanations, so it is up to you what/how you disclose the things you wish to say in that answer.

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Now, for you scenarios:

1. If I did indeed not apply for the competing company, for whatever reason.

You could well say that reason whatever it was as an answer.

If you rather not disclose that particular reason, you could try something like: "I wasn't aware of that other company having job openings. Besides, some fellow professionals suggested I tried applying here, which I thought was a good idea."

Or well just "I wasn't aware that other company was recruiting."

Another option is to say "I was aware of that other company, but doing some research led me to think that they were not the place I was looking to work on." This could work better if it is not possible for you to say the other alternatives.

2. If I did apply for the competing company, but ended up declining their offer.
3. If I did apply for the competing company, but got a rejection.

This is also up to you if you want to disclose.

If you decide to do so, then something like: "I did applied for the other company." should suffice. If they insist on why, try adding "It simply wasn't what I was looking for. That's also why I applied here, as I really like what I have seen so far."

This way you are not only being polite, but you are also putting the interview back on track (which should be to focus on this company and its culture).