Hello Pieanne
I've never heard 'I was cut underneath' either.
A competitor who sells his goods or services cheaper than yours is 'undercutting' you, and you could say that you were 'undercut' by him.
If I did hear 'I was cut underneath', I would take it in a literal sense: a whale might be 'cut underneath' by a malicious deep-sea diver...
MrP