The entire conceit of capitalism is that competition is good, and that competition forces companies to better address their customers needs. If they're not doing this, then someone can come in and undercut them.
But what happens in the scenario where the person comes in, undercuts them, and then sells to the bigger company? How does this force the larger company to change? This is like antitrust 101.
I don't understand people who claim to be proponents of capitalism and are opposed to antitrust. If you want the free market to determine anything with fewer regulations, then we need antitrust. Otherwise we need a lot more regulations. Which one would you prefer?
I have a feeling you wouldn't recognize anticompetitive behavior despite it hitting you in the face for the past 10 years.