I've seen pig fattening sheds, I've done more actual hands on work(still not a major livestock guy) in more "traditional" small scale operations. The thing I think you are missing is that you think the confinement actually causes the bullying(it might depending how things are set up). That happens even when they have ample space. Chickens are horrible about this even with no restrictions on their roaming during the day.
I actually did a behavioural study on pigs. I found that very small environmental enrichments (such as wooden blocks on the feet of the food troughs) caused a massive reduction in the rate of aggressive behaviours. Although it is not a direct comparison (because of the difference in age and gender composition), the almost complete lack of this sort of behaviour in outdoor breeding colonies also tends to support the claim that it is the conditions that make this a major problem.