Do your best to Ignore it. Hopefully your attitude and reputation will speak for itself. Most clients will see right through a competitors bad mouthing. THe ones that dont, you probobly dont want as a clients anyway.

I've heard some rediculos statements made against the company I work for as well.... Most ludicrous was that we were recently bought by Circuit City, so theres no reson for the customer to come back to this store to purchase their gear..........

Of course the client did come back.......