Netscape could compete with IE. Netscape couldn't compete with the entire MS empire being dedicated to destroying them.
MS played hardball and were willing to do anything to gain nearly complete dominance in the market. A lot of their strategy was clearly anti-competitive and anti-consumer. It's not even a debate. See U.S. v Microsoft. Netscape couldn't compete with that sort of scorched earth strategy. And it took Google and Mozilla years to make a dent in that and MS had to help by letting their market dominance stagnate for over half a decade and causing endless irritation for a generation of developers who are always going to treat an MS browser as a second class citizen.
So yeah, great for MS, they beat Netscape. But they couldn't beat Google or Mozilla and that's the most recent battle, so the one that actually matters.
No-one will ever know.
Perhaps we're meaning different things by the word 'compete'?
So, yeah in the sense that a five year old Rocky vs Ivan Drago in a boxing match is a competition technically. But no one can honestly say it's really a competition, as in there's any spirit of competition.
U.S. v Microsoft makes it pretty clear. MS'es strategy was break the law and do anything to win. Then it was weather the lawsuit and win or lose, they had years to position IE as the dominant product. So losing hardly mattered they still got what they wanted.
What could Netscape actually do to counter all that? They were practically bystanders in this nearly as much as my grandmother was. Such was MS'es power in the 90's.
"We can't compete, let's make an anti-trust complaint"
"I can't run as fast as Bolt, so I'll shoot him"
Doesn't alter the fact that Netscape was incapable of competing with Microsoft (in fact I think you sort of made my point, there) once the latter got their arses into gear.
Edited: Wow! The "Viewable With Any Browser" campaign site is still up, in 2017. I wonder if they're keeping it handy for the forthcoming Webkit monopoly ...