It has been estimated the 50-60% of negative blog coverage of an organizations brand or product is instigated by competitors. One tactic that these companies often resort to, to compound the damage, is known as link bombing.
When a blogger wants to inflict serious damage to a competitor, they may request links on the brand name from other bloggers. These bloggers in turn develop their own links to the original blog and so the number increases. This type of adverse publicity can spread like wildfire and cause serious reputation damage for your brand.
The end result is that all these links can help to push the offending blog up the search engine ranking for the brand name. This is why blogs containing adverse publicity about a brand can often rank higher than the actual brand site.
Other types of flame sites can also use a similar link bombing tactic to get highly ranked. They often use submissions to multiple directories to create the links to their site.
The only way to combat this type of situation is to optimize your own site and start a link building campaign. Because Google has an aging policy it takes time for these new links to be approved by them. Therefore link building should be an ongoing process for your brand and products. And you should aim to have this in place before your competitors start spreading news about your brand.