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Though I don't experience your pains I have seen on periods where dozens or hundreds of users/bots just flush into a website.
If you have a close competitor I wouldn't be surprised if they rent out botnets to attempt to shut you down or hurt your business enough they stop going to you. There are methods to filter out botnets but this is something your webhosting company should have implemented.
I can't really help you out on a technical level just yet. I hope you solve your problem though and sorry to hear about it.
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