Most people would call that a dictatorship.
Having a monopoly on force is what a dictatorship is. If you can compete for justice and liberty (courts, law enforcement, prisons, arbitration, etc.) the likelihood any one person or persons can mete out punishment unilaterally and uncontested, is lessened. It's likely those groups would never get big enough to form a dictatorship. You endow unlimited power to the select few, use an arbitrary unaccountable and unassailable vote, or violate contract rights, and you almost always get abused.
In the real world, if you are competing against men with guns, you need bigger guns. The guy who has eliminated all rivals will have the biggest guns and may be backed by a foreign state. Any new company will be slaughtered easily. So your proposal results in democratic government with all its faults being replaced by dictatorship.
The road to hell is paved with good intentions.
That assumes a binary situation. By your logic the US has already taken over the entire world right and crushed all the sovereign powers who individually have less firepower than the US. Err wait the US hasn't taken over the world?
If there are 10 security entities and the most powerful has 5 units of firepower but the other 9 entities have 1 to 4 units of firepower but combined have 30 then the largest entity isn't going to be able to win by force. Also belligerence by the largest entity will lead to a loss of consumers and thus revenue and thus ability to retain 5 units of firepower.