There's a lot of talk around the water cooler and probably always will be regarding the ability or not of a competitor to hurt your rankings in Google's search results.
I personally don't believe it could happen (anymore) for a few simple reasons - reasons related to the Panda update.
The way I see it, is that a competitor could try to create "bad" links to your website but in essence could only really do so through low-quality websites. I ask, how difficult it would be for a competitor to create effective bad links on a site in which it would actually matter.
I personally also have no worries about a competitor creating "bogus" links to my website - namely links with anchor text that I wouldn't be too fond of. The reason is because I believe Google has a good idea of the nature/theme of the sites it ranks in the top spots and a those new bogus links are merely supplementary or useless especially if the anchor text of said links aren't in line with the content of my site.
If a competitor creates a thousand bogus anchor'text'd links to my site, how easy is it for Google to determine the validity of those links? I say pretty high. Would those links change my link profile dramatically or at all? I say no.
My Site's History: An example: for years Google has seen anchor text on my website in the form of "this nice keyword" or like phrases, and suddenly starts finding links with anchor text that is way off and completely unrelated to my content. Do you believe that would ring a bell in Google linking algorithm? I do. Easily.
How suspicious would that be? How hard would it be to write that into their algorithm? Probably really difficult for a person like me but not for the scientists Google employs.
The Panda update is all about quality. Who is Google to say what is quality and what isn't? We make that determination on a daily basis and no matter what we think, Google's doing it too. So with that, my supposition is that with the focus on quality, an effective bad link would need to come from a high quality site in order to negatively affect me and getting the placement of said link is highly, very highly unlikely - can someone prove me wrong?
If you've been negatively affected in the SERPs (search engine results pages) by a competitor please, share your experiences here. I personally would like to be enlightened further as to what's happening out there in competitor land and so would the other members appreciate your story.
Also, if you have any true blue bad linking strategies that you've seen work in the past and still believe would work now, please feel free to respond.