How does a law like this increase competitiveness? It looks like it decreases competitiveness, since banks can no longer compete on who has the fastest transfers.
We know that sub-10-second-transfers are possible, by making it the norm you are not decreasing competition, just forcing players who are not competitive in this regard to conform or exit the field.
Markets are not perfectly efficient and you can have competitors surviving due to foul play or simply customer inertia. This protects consumer interest by forcing such market players to at least get to a baseline level or die.
How is this anything but a win for consumers?
In any case, transfers rely on both banks processing the transaction speedily, so it wouldn't seem like something one bank could do unilaterally.