But you still need to work around collusions between candidates. Candidates will be pushed to run on a slate of N candidates for N seats, and promise to support each other. Voters who want any of their positions will avoid somebody who would interfere with their own top priority. The result acts the same as a two party system, where all N candidates support the same party.
You can get some benefit by combining it with List Voting, where you go ahead and reify the party system. The party gets to send whoever it wants, proportional to the votes.That makes it harder to run multiple candidates that take all of the spots. (Not impossible: they can break into multiple virtual parties. But that's risky and coordinating votes is difficult.)
Even at that I'm not sure it really helps. Lawmaking is still fundamentally a "single member" operation: a bill either passes or it doesn't. You still get pushed to be in either the majority or minority coalition.