So lot of oddly negative answers on here... I'm just a worker bee in a local sign shop, but it sounds to me that even though the slander is a pain, it's also just apart of life when it comes to competition. We hear it day in day out from clients that get fed up and come to us and I'm sure we have our fair share of angry fan-base. Equally, sign shops make and break packs between each other and life goes on. You have two things that in your arsenal, you have working experience in bettering a lacking company and you have knowledge of what your competition offers. Provide a service they can't. If they refuse to share art files with their clients, that's a no-no on them - offer to redesign what they aren't providing (for a fee of course.)
But if slander is your issue, provide incentive for your current clients to write reviews of your business. Great online reviews can easily combat poor word of mouth - you forget easy talk, but a review is forever available online beside your company name.
Best of luck (and as much as people get angry about low-balling, that's the name of the game, you can't feel responsible for other's prices when you can legitimately create it for less.
The high road option would also to approach the angry two and offer a business deal - if there are things you can create that they can't, offer a whole sale rate to them. We have a couple of those deals with various shops and ad agencies around us.
Definitely don't sue though - it's a waste of money and a lawsuit over hurt feelings will drag your name through the mud worse than anything they could say about you..... again... best of luck!