In my opinion, that's a third type of merger: When two ailing companies merge to try to save each other. Best avoided as well.
Sure. But if it works, it's amazing for the shareholders. Just look at Anheuser-Busch Inbev (and their history of merging/consolidating) and their soon to be merger with SABMiller.
And if you don't have the appetite to risk the merged company, the reduction in competition will spill over into other firms. So if you see a marketplace consolidating and you think the reason is to decrease competition, then buy one of the remaining independent firms.