Msg#: 4254936 posted 6:42 pm on Jan 19, 2011 (gmt 0)
I believe what you are referring too is known as google bowling and there are varying opinions on how effective it can be at reducing the rankings of the target site.
My completely uninformed, wild guess is that some competitor(s) see that a site has lots of good inbound links and is outranking them, so the competitors then set up thousands (or tens of thousands) of spammy links in the hopes that google will devalue ALL of your inbound links (including the good ones).
Matt Cutts has said not to worry about that and that it is difficult for a competitor to hurt another site. Please note that he did NOT say it is IMPOSSIBLE for a competitor to hurt another site.