Yes, this definitely happens and goes both ways. I've known people that have applied to and interviewed with a competitor to bring intel back to their own organization.

Wow, crafty. I'm glad you were onto them.

Run.

Trust your gut. They sound like assholes.

I just got out of a 9:30am interview that was a bit odd. I am interviewing with a competitor to my current company. Anyone experience having an interview where it felt like they just wanted to get inside information on a competitor for an upcoming bid? Some normal questions thrown into the mix, but they only actively took notes to the question they asked regarding operations of my project. Started out the interview by insulting my current company. So weird. Not sure if this was a test to see my behavior under pressure, these guys are assholes or they just wanted inside information for a bid. Have you BTDT?