This abnormal behavior is usually associated with sheep in limited pen space or limited in roughage. The dominant animal will usually have their own wool intact. If spacing could be an issue, try to reduce the number of animals in the pen by at least 50%. Maybe the bigger issue is lack of roughage in the sheep's diet. Small particle size of the diet (lack of roughage) leads to decreased rumination time. Ultimately, there is more time to pick at other sheep. There has been some research that points to a zinc deficiency and wool pulling. In zinc deficient sheep, loss of wool, wool eating and skin cracking are the major clinical symptoms. Paraketosis and hyperkeratosis are prevailing skin lesions found in sheep with a zinc deficiency. Make sure the diets you are feeding your sheep have adequate zinc levels. I would advise submitting a feed sample for quality testing.
Hope this help...L