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But what is there to stop them from simply hiring a private militia to kill their competition? The NAP?
NAP, aka respect for private property rights. If a society does not respect the NAP then it is a society based foremost on the threat of violence. What is government - the threat of violence - the threat of force. So, if a society allowed private militia to kill competitors you would end up with a gang ruling over others - you know - like government. So, yes you need a society with respect for private property rights/NAP. Would all people be peaceful? Heck no! Does this mean there will also not be private institutions that uphold the law - uphold respect for private property rights? Of course! People will still need security, decision making and justice! A peaceful society with respect for the NAP would NOT allow a private militia to violate others rights! Business (in the absence of government favouritism) survives on good products, services and reputation. Sending a militia against you opponents does not do well for your reputation! So ultimately you have a choice - government, which is an involuntary institution with a monopoly on force and rule making that serves the elite to the detriment of others OR A free society with respect for private property rights that is more decentralised and snuffs out any trouble makers.
So who decides the law and how does justice get upheld in this system? It seems to me that if any corporation becomes powerful enough, it essentially becomes the de-facto government in any areas it has control over.
A corporation is a beast of the state. A corporation gets special gov privileges like limited liability and uses regulatory capture to lock out newer incumbents competing against it. There are no corporations in a free society - only business who have to fairly compete! Please also note the law preceded government. Government coopted it! This is true of common law and maritine law. Cut the conflation in your mind. Even today more disputes are handled privately out of courts. Ebay, the world biggest merchant has in-house arbitration. You do not need an institution to monopolise decision making, arbitration, and justice. Justice should be about restitution to the victim. Currently it is about fining the victim or putting them in a cage rather than compensation and restitution. Did you know Pananarchist Ireland for 200 years had many arbitration services called tuaths. There was no government - only various tuaths that would represent you. You could join or change tuath as you pleased. For the most likely solution: https://youtu.be/fZ0Qkhnt6bQ?si=cjPT5E03eHAkiJwL