We actually raised a concern with ds' Out of School Club because we were concerned that ds was starting to exhibit some bullying behaviour towards his friend across the road (they were doing an Anti-Bullying initiative at the time). We just wanted some advice as to how to nip it in the bud.
Turns out it was ds who was being bullied quite badly at the Out of School Service by one of his so called "friends" and two other boys (one slightly older boy who lived around the corner from the "friend" who "could do no wrong" according to his mother
and whose father didn't believe that there was such a thing as bullying 
I suppose I should feel sorry for the boy as he wasn't being done any favours by his parents): some really nasty name calling and ostracising, plus the beginnings of physical bullying. They'd been about to raise it with us. 
We took it up immediately with the school and they were brilliant. Got the boys to admit what they were doing and that it was wrong. Put the fear of God the deputeinto them about repeating it. Fortunately, the older boy moved away shortly afterwards.
Ds' "friend" did get up to his old tricks again a few years later, but ds had the confidence to raise it with us and we took it up with the school again. Ds learnt not to get drawn into his friend's bullying activities (although he did walk home early after a sleepover without the mother even warning us he'd left in tears after being ostracised again) and not to be drawn into "having" to be friends with him.
When he was in his last year at primary school, ds would even get younger kids asking him how to deal with this boy. He would advise them to ignore him - he was only going it for attention and to make himself feel important.
Interestingly, ds is now a self-confident popular boy at secondary and the times I've seen the other boy (who went to a different school), he has looked like he wouldn't say boo to a goose.
The important thing for children is to know that they are supported - and that includes calling out/acting on any bullying you witness.
Good for you for not standing by.