You're arguing that competition is sufficient for quality, not that it's necessary. The first vendor might choose to provide a high quality product regardless, which could, in itself, provide a barrier to entry preventing competition.
The real win of competition is that it allows a market to be commoditized, at which point it actually operates like we all learned in our Econ 101 class.
If there is no competition, you can get by with a crappy product or service if your client need it.