Assuming that's true, for starters they wouldn't be regional monopolies so there would be competition and choices
Why wouldn't DROs gain regional monopolies? There is nothing innately special about free market protection that prevents regional monopolies.
For example, the protection agency could have some extra money and build/purchase the major roads in an area. That's a significant asset. They may require anyone traveling on the roads to subscribe to their protection service.
In order for a new agency to compete it would require some substantial investment to build up similar roads.
Basically, my point is that over a long period of time a DRO/protection agency will become a part of the community. Unless there were two equally competing agencies from the start I think trying to break into this kind of market would be very difficult considering the resources required and the possibility of physical retaliation.
A protection agency protects subscribers, but who would protect the agency? A small start up agency could be harassed by the bigger one with force. Even in a free market economy truth will not always win out, if the monopolistic agency does a good job of managing the public opinion and keeping a majority of their subscribers happy they could maintain the status quo.
they would have accountability for their actions in a free market.
Before they can be accountable they would have to be guilt of something, which means public opinion would have to be against them. A large company with a good PR department can manage such public opinion. There is a lot a protection company could do to get away with something bad before they even have to get to the accountability stage.
If somehow the PR department fails and public opinion is negative then it becomes an issue of time and resources. A competitor would have to offer an equal (or sufficient for people to switch) service before people forget about the bad incident.
I think a good modern day example is gas stations. People chose which gas station to fill up purely on a financial basis not on which gas company has had less oil spills. I think the same will hold true for a DRO/protection agency.
I don't think that competition between protection service is similar to competition between two grocery stores. The stakes are much higher and the tactics could be deadly given that the expertise of the firms is violence. It seems unlikely that a protection service would restrain itself from using it's own service to protect itself from competition if it can get away with (eg, good PR department).