By this logic the few bits that Stagecoach operate into Edinburgh wouldn't be allowed; or would you ban Lothian and just keep the bits operated by the big groups?
There are always going to be places where more than one network interfaces with another.
It's like saying that Hull Trains shouldn't be allowed to operate into Hull or into London. Or saying that the once a day LNER train to Bradford ought to be cancelled to let Northern be sole operator.
There's 2 LNER trains a day to Bradford. They did announce the second would be removed, but that's been backtracked and once again there's talk of increasing the service.