Capitalism absolutely was designed for free market competition. Monopolies are forbidden, hence the Sherman anti-trust act, which sadly is vastly underused, after being badly misused in the past. Two conditions destroy capilalism...

1) Government over-regulation
2) Monopolies

Note the term OVER regulation. Some regulation is necessary, hence the Sherman Act, which is designed to hinder monopolies. If only it was used properly.

Corporations hate true capitalism. Their desire is to increase their bottom line, and ridding themselves of competition by becoming a monopoly does that for them, or by colluding with other corporations, both of which are against the law, if the law would be applied properly, which it sadly is not.

Some are government regulated monopolies, such as Southern California Edison, PG&E, and the Southen California Gas Company. Free market competition isn't allowed there. State, County, and local governments justify this by saying their regulations benefit the customer most. Some actually believe that. Others, in government, know it's the best way to benefit themselves.