How do street drug dealers compete with each other? Not by lowering prices. No. They actually attempt to monopolize their territories by either eliminating or merging with their competitors, until a stable state is reached.
They then set their prices to maximize margins and profits. This continues until something happens to destabilize the market, at which point there is some kind of struggle or even war, which stops when another stable state is reached by eliminating or merging the competitors.
Without regulation to prevent the creation of monopolies and cartels, this happens in legitimate businesses just as much as street drug dealers.
Competition by lowering price does happen, but when it does, it is part of the unstable phase that ends when another stable monopoly or cartel forms, at which point margins go right back up.
The elimination part of that is important though. If companies were allowed to round up a group of the boys and go break some kneecaps when the boss didn't like something then it is true there won't be a lot of competition.
But in civilised country that isn't an option. Nobody wants that level of deregulation - basic policing of physical safety is something of a given. People are somewhat protected by law in their attempts to compete.
But companies do things like dump product to drive a competitor bankrupt, and then raise their prices back up. After that happens a few times, people get the message that there is no money to be made competing with them.
Or they play patent games and litigate the competition either out of business, or strongarm them into joining a patent cartel.
The tools may be different, but without specific anti-monopoly and anti-cartel regulation that is enforced aggressively, companies will ruthlessly drive markets towards monopolies or cartels.
You charge robbery rates for drugs A, C and F and I'll take B, D and E.
We both make lots of money and don't have to worry about each other.
Competition assumes sellers don't collaborate and negotiate but they do all the time.