The schooling system is meant to be competitive and as humans it's very natural to compete in different areas of our life , including the educational sector , competition only becomes bad when it becomes unhealthy and leads to unhealthy lifestyles like pushes one to unethical behavior, causes drug dependency, hatred, jealousy , physical/ verbal abuses and many other unhealthy attributes.
Academic competition has it benefit in the educational system, especially when it's healthy, it encourages growth and make students to strive for successful grades amongst themselves.
It's very natural for students to compete in the educational sector and that's because in schools, success is measured by our grades, academic opportunities like scholarships are given to students based on their academic grade and even the outside world jobs are mostly offered base on academic grades and successful grade.
A system that centralizes success and hardwork on grade and academic success is bound to be competitive ,it only becomes a problem when competition becomes unhealthy, when competition is now turning to jealousy and envy, when students get into drugs due to failure to meet up to goals and many other reasons.

Grading is important in school, it's an unavoidable process for every student, but there are other core values students acquire in school that's being neglected, success shouldn't be placed only on the academic grade of a student, but also certain skills that will also help them succeed in the real world, and not just grade.
I love and admire when I see a good result, I'm not trying to undermine the essence of having a good grade, but take good grade away from some students, you will realize they lack basic creative skills, basic knowledge, they don't think critically and lack good emotional and communication skills, these are skills necessary in our daily lives.
These are skill that will help and also build them in real life, educational success shouldn't be based on just grade, they are alot we learn in school , measuring success through grading is the core cause of unhealthy competition, student should acquire more values for themselves and not just the grade.
Schools can make competitions healthy by not limiting success to just grading , doing this will limit the rate students are getting desperate, taking drugs, depressed and indulge in unethical things to succeed in their grades, they only do this because they feel like failures, but making them understand that they are good in other areas will help build confidence.

School is a place where learning, nurturing and grooming takes place, it's not a place for perfect people, experts or professionals, failure in school, doesn't even determine the future .
We all went to school for the purpose of learning diverse knowledge and basically grading is meant to know a students ability. So failure shouldn't be a thing to shame students for, but rather it's an alarm for concern and support.
This is where mental health support plays a role in the educational system, we should focus on counseling students and getting to know why they feel or act a certain way, rendering a solution and making them understand that grade doesn't define them or their personality.
This will help reduce depression, emotional instability, drug abuse amongst students stop them from feeling they are failures and stop unhealthy competition for grades
The core purpose of going to school is to learn and schools should place/ prioritize learning over grades, prioritizing grades only build pressure, limit students from learning more and acquiring other essential skills needed to succeed in real life, because school is an ideal world.
A system that prioritize learning, will breed students with healthy mindset, less pressure, reduce anxiety and depression amongst students and create healthy competition amongst students and a healthy place to learn.
Competition is not so bad but it becomes bad when those involved make it unhealthy and starts doing unethical things just to win.