If wealth is accumulated due to merit, why does wealth tend to accumulate within families? Are these families somehow more meritorious than the rest of the population? Is it perhaps the multi-generational connections made in industry providing additional benefit to those families?

As for the free market, the FDA was formed because bakers in the free market realized that sawdust was cheaper than flour. The free market also requires perfect information to function correctly, but even if you have that how will it help if there is no better regulation. Once upon a time the only kind of match you could buy were made with white phosphorus, despite how dangerous it was to work with. It took regulation to switch to red phosphorus, even though the expense was only slightly higher.