Oh, it does, by lowering the production cost of the products, which allows competition to drive prices lower.

Unless, of course, the market turns into a monopoly. But even in oligopoly markets (such as the cola/soda) there is still plenty of choice, especially around lower cost products and with the rise of white-label/home-brand products.

If the prices were higher, it would be trivial for local businesses to displace them in stores.

Just the threat that a big company has the capacity to lower prices drastically can keep small companies from entering a market.

In some cases, yes, but take a look at your local supermarket and see how many new brands not owned by the large ones popped up in the past few years.

You can also look at how much the large ones are buying local new brands (such as Blue Bottle). Tastes change, and small local companies are a great way for the big ones to figure out which new products work.

Not really, given that there can be high barriers to entry in getting on store shelves in the first place.

Not really, I've seen many grocery stores have sections dedicated specifically to local stuff because of the whole 'local' movement.