Citing contemporaneous (interlaced?) preprints In my area of research distributing preprints of results is very common. Consider the following seqence of events:


Group A finishes paper P, distributes it as a preprint and submits to a journal
Group B posts related preprint Q
Group A receives referee reports for paper P. Referee requests discussion/citation of Q.
Group A responds that Q came later and was not used in writing P, therefore no detailed discussion/citation necessary.
Referee insists on discussion of Q in paper P


Who is in the right?
Cite relevant literature
Since you have the option of adding a citation to a relevant source, you should do it. It improves the paper by making it a more useful reference, and comparing and contrasting the results might also be useful.
Priority
If relevant, use a phrase like &quot;A very recent preprint A claims this and that.&quot;, or even, if your results are very similar and you really need to emphasize priority, &quot;During peer review of this article a preprint A was published. The preprint...&quot;.