Given any business can freely choose who to do business with, I don't see how this could ever be the case
The former isn't quite true, you can't choose to not do business with white people for example. So there could in
principle be some law that prevented this. And also - while it's not the claim you're responding to - Visa/Mastercard/Amex could in
principle make it such that retaliation to chargebacks isn't permitted in their terms and conditions.
(That's not to say I'm aware of any such constraint or law, just to say that it could easily be implemented if parliament or the card companies wanted to - and I think if it were being "abused" by merchants much then there's a good chance it would happen. Again, it's never happened to me but I do less than one a year and they're always blatantly justified so I accept what everyone else is saying about retaliation being more common than I thought)