Honestly, I usually just tell my kids to find someone else to play with. While being nice to everyone, but there is no need to be subject to this sort of treatment from another person. Your son is free to play with and do what he wants, without permission from this other child. he can allow this child to participate, but not make rules as to what your child can and can't do. Soon you'll see this other child backing away and finding someone else to "control".