Correct. Crony politicians however can't say they're promoting "non-competition", and they can't say "my biggest campaign donors are crony businessman who won't contribute to my next campaign if I don't pass this law." They instead have to spin it, say they're passing laws to "prevent unfair competition" and "enforce 'free competition'", and hope no one notices.

I would call this NON-competition enforced by law instead of "free competition". Now I get it. That that's why she calls it a contradiction in terms.

In the book:
The Anti-dog-eat-dog Rule is passed by the National Alliance of Railroads in section 145, allegedly to prevent "destructive competition" between railroads. The rule gives the Alliance the authority to forbid competition between railroads in certain parts of the country. It was crafted by Orren Boyle as a favor for James Taggart, with the purpose of driving the Phoenix-Durango out of Colorado.
http://en.wikibooks.org/wiki/Atlas_Shrug...

In real life:
Tesla banned from selling cars directly to consumers in New Jersey, Texas, etc.
"They claim to be trying to prevent 'unfair competition,' ... "Bob Glaser, head of the North Carolina Automobile Dealers Association, told The Associated Press, 'It’s a consumer protection, and why we say that is a dealer who has invested a significant amount of capital in a community is more committed to taking care of that area’s customers.'
http://preservefreedom.org/new-jersey-ba...

Yes. How do you enforce (or try to enforce) free competition? What's an example of that?

Start with "free competition" and "enforced by law". They are opposite and cannot exist together.
"Free" and "enforced"? Do you see that they contradict each other?

I do not understand this quote. I would like to learn more about it.