You could always go for a US federalism type deal (but made more extreme), where you try and make the Federal government as minimal as possible and cities/towns as in in control as possible. Then there would be competition between cities for tax payers, with the ability to move limiting monopoly.
But that would probably be a negative for the same reason that bigger companies inevitably swallow smaller companies without government intervention: in the modern day economies of scale are everything. 10 companies that make 10,000 of something will generally lose to 1 company that makes 100,000. Monopolies will inevitably flourish without a strong government controlling them. (And moreover, in a globally connected world, if you kill all your monopolies it’s very possible another state that allowed their’s to flourish will have companies that can outcompete yours)
I’m not exactly going anywhere with this, I don’t have a great answer to what the best option is. You can try and force there to be 2-3 companies in every sphere…but that’s barely competition. You can try and regulate the massive companies…but almost inevitably large cash-rich employers end up with sway over the government. You can try for lots of local competition and shut out foreign companies…and lose out on the many benefits of free trade. You can try and cut a balance between all of the concerns, but it seems that whenever government tries for nuance it ends up creating a very expensive bureaucracy.