It's not so much about competition between the students as it is about competition between the schools.
If your curriculum puts economically disadvantaged students at an academic disadvantage, and your school has many of such students, then your school ends up with less funding because your students do poorly on tests compared with the well off schools. So if you want to help the students you've got, you come up with curriculum that doesn't penalize them for having jobs, kids, or other outside-of-class reasons that they can't sit down and read at length.
I suggest removing the competitive grading system, and adding more hours to the school day, not removing the educational opportunity.