1) Not all fragmented industries can be consolidated. With some industries, forming a large company in fact could actually be a detriment to keeping costs down (as opposed to being able to create efficiencies and economies of scale with a large company). Some examples could be the furniture industry or the concrete block manufacturing industry (concrete blocks are expensive to transport and easy to make locally, so a large organization probably wouldn't provide much advantage).
2) The term "fragmented" can be a bit misleading, depending on the size of the industry. An industry can be so large, that it is really made up of a bunch of smaller sub-industries which themselves are in fact very concentrated. For example, the plastics and rubber industry. As a whole, the $200 billion rubber and plastic product manufacturing industry is fragmented into hundreds of niches, but individually, each of those niches can be pretty concentrated. For example, tire manufacturing, a $15 billion industry, is very concentrated.
One could also look at the locks industry. Globally, the locks industry is fragmented, and in Asia, it is still fragemented, however in most of the developed countries, within each country, the industry is fairly concentrated.
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