That does (or did) happen! For obvious reasons though, no company is going to say that they did an unauthorised decompiling of a rivals game's code.

More often than not games companies choose not to do it today, due to it leading them to lawsuits. This would most likely be because of the breaches in employee confidentiality contracts that are a frequent occurence nowadays.

Mind you this is all old info from a games mag about two years ago. So, some stuff could've changed since then.