[NoMoreNicksLeft]

>Wouldn't that create an enormous hole in the market for other less-scummier companies to jump in, albeit at perhaps lower margins?

If non-scummy companies realize that even trying in that region will lead to lawsuits by malcontents and losers, they'll leave too. You're left only with the scummy ones, because they figure they'll have skipped town before the lawsuits come rolling in. And if your regulatory framework discourages that heavily enough to dissuade them, they'll stay away too.

When circumstances are hostile enough, no one wants a piece of it. Always lower-hanging fruit elsewhere.