Is Citation Extortion practised?

At ETD2007 one of the delegates related and experience with a publisher – I never got the details. She had submitted a manuscript and been told by the publisher (or editor) that it would not be published unless she included at least two citations to papers published by that publisher.
I have never encountered this myself but I have no reason to doubt her account.  The only purpose of the practice is to increase the perceived standing (and hence monetary value) of the publisher. It is immoral and totally unacceptable. I’d be interested to hear whether this is more than an isolated case (though presumably routine for that particular publisher/journal).