Whether that's true or not, I don't think it's enough to rely on the invisible hand to squelch this practice. The truth is, as long as it is advantageous to sue frivolously, companies will do it. And this is bad for the free market, the economy, and consumers.

Policy change should make it much more costly to launch a frivolous lawsuit (as distinct from a claim made in good faith), e.g. by making it much easier for a bullied defendant to counter-sue and win significant damages.