M.C.
This is very common. My son (7) and his cousin (5) are together constantly and tend to argue constantly. Here are some things that we try:
1. give each of them time to tell their side of a story, then decide who's right/wrong.
2. when trying to decide who goes first in something, use neutral games: draw a card, rock-paper-scissors (with their eyes closed), etc.
3. Teach them that they don't have to play together all of the time, but they have to play together nicely. When a fight breaks out, then they have to chose something different to do.
4. TRY not to play favorites. As it is in my family, the younger one ISNT always the little angel.
Good luck.
M.