From the following...
https://kb.rspca.org.au/knowledge-base/what-are-the-animal-w...
...there is this quote...
"nicks and cuts may occur if the sheep does struggle, or has excessively wrinkled skin or the shearer is distracted or under time pressure"
Time pressure - exactly what such a competition would encourage. I'm not saying it happens, but the urge to hurry could certainly lead to such a thing.
I mean if winning is the thing, then once the sheep is sheered, who cares about the sheep anymore? It's all about the wool and what you do with it. In 3 hours.