My group is currently submitting two papers in the same venue and the first three sections of one are copy/pasted from the other. About half of the text of the two submitted papers is identical with just a few words and formatting choices changed here and there.
This seems to be the result of miscommunication. When I realized what's happening I flagged it up to my colleagues as self-plagiarism and advised that we retract one of the papers.
One of my senior colleagues instead advised that what happened is not necessarily a problem. My colleague says that it would be good practice if the two papers referred to each other but otherwise it's not an issue and it's not self-plagiarism.
My colleague is the area chair for our submission and I don't want to take the matter to the program chair because I don't wish to cause a scandal. I checked the code of conduct of other relevant venues and they all define self-plagiarism as copying one's already published work. I don't think that makes a real difference, we're still copying our own paper and not telling anyone about it. If it was someone else's paper and I noticed the same thing I would surely complain.
What is the right thing to do here? I'm worried that if we don't retract the paper and both papers get published people will notice what happened and it will leave a bad stink over the reputation of everyone who is a co-author in the paper.