You are wrong. There is nothing in the passage to suggest non-efficient companies provide too much of a competitive challenge for an efficient one, so D is a complete fabrication. (The efficiency makes them more competitive, not less.)
You need to read the part right after what you marked in red. My efficiency in making product X is to cut costs, not make fewer Xes. I can now grow, spending the same amount to make more Xes for the same production costs.
Student or Learner