If he genuinely has a low number of links then odds are he probably just danced up to the top spot because his content and website was new.
I'm tired of seeing people who claim to be IM gurus constantly saying that domain age is automatically older equals better, because while they're right for the majority of cases, Google will often rank a new site with new content highly for a search term because it deems that information to be more relevant at the current time.
Imagine if it hit the news tonight that they'd found alien life on Mars, do you really think that for the next few months any website discussing the alien life wouldn't be listed under the search 'is there life on mars' just because there are already established, older, websites owning these keyword spots?
Odds are, this is most likely only a temporary effect, if they genuinely have a low number of backlinks then you'll find they'll quickly drop back into obscurity - however, in the mean time, the best thing to do is to build high quality high PR related links and update your content as best as possible!
Regards,
JFoulds
Exactly, the reverse happened to me, I have an authority website with awesome content ranking 1st place, some time ago the most crapiest made for adsense just jumped right at me and sent me to second spot...I was humiliated... (continues bellow)...but it was just a FRESH content jump and it was because I have such a strong link profile I hadn't posted for months, my Bounce rate is like 0% to 15% (cause am a BAUSSSS

)
I dont wanna bomb this dude cause i am not sure it would work and i dont wanna be bad to people. This dude got me fair and square. I should had the emd already just never thought about it. Lesson learned. The site made 4 bucks in 5 days of Feb.
Don't do this, BE A MAN, thats the easy way out, I once was pissed of and clicked like 7 times on a guy because I though the guy was doing it to me (another site were I as second and climbing to 1st) I guess the guy got territorial, I even submit a report to google on invalid click acitivity detected and removed Adsense from that site for a while... now it's just a site that makes 1 or 2 per day and I just dont give a f*ck, I'm happy I didn't click bombed the shit out of the guy, just those 7 clicks got me thinking for a whole day, guess I'm a good person afterall...KARMA, it IS REAL!
I know I shoulda bought all the emds. Rookie mistake thats going to cost me in the long run. This keyword just took off finally after I developed the page 3 years ago. I always sat at no. 1 but there was never any search traffic before.
I screw up in a way so bad regarding this and my primary business that its probably one of those things that I will never share, you won't believe how stupid I was and SOOOO LAZY that once I decided to register the particular domain the guy beat me to it the DAY BEFORE and I had like 9 months to do it... guess life teaches you a BIG lesson every now and then, though I'm a slow learner
And regarding the vital question, check your BOUNCE RATE, if your bounce rate is bellow 30% compare your content to his, if his is less interesting and people just bounce away he will drop again, unless your bounce rate is crap and that probably may be the reason why he is rapeing you.
Another thing is content freshness, how often do you update? when was the last time you posted something new?
What you need to do is simple, search google for high pagerank society, it's a network from the guys at linklicious, like all their services its utter crap, but 50-100$ will do, what you are going to do is buy the site wide links, by has many as you can, mix it in, there are other networks, but this is the blueprint I used to get back to 1st with my problem.
Write new content, write a new AWESOME, UNIQUE, COMPELING article for the next 5 days, post once per day, I assume you have wp and your site pings, if not google ping-o-matic or something.
Then write some more content, space it scheduled for a couple weeks, you can buy really good articles for like 5$ almost anywhere.
Then go to fiverr and buy social bookmarking gigs, buy like 4 or buy 1 once a week, try to buy the ones that the guy says he will scrapebox the sb's, so they get indexed, nothing on earth will get your social bookmarks indexed unless its some link from a blog comment,
So to recap, your budget to get back to 1st place:
50$ USD homepage links from highpageranksociety
50$ USD for 10 new articles.
25$ USD for 5 weeks of social bookmarks to homepage AND deep site pages.
Min. Total: 125$, I recommend you spend at least 200$.
This should be enough to get you on 1st place in 3 to 4 days up to 3 to 4 weeks, there are a lot of missing factors, your inbound and outbound link profile and specially your on-page SEO
Also google open site explorer, check your authority score vs his,
If you aren't a paranoic, you can PM your problem keyword/site and you competitors site and I'll have a better look onto it,
Best Regards
Joricam