Take Clara Haskil Piano Competition (link) for example, there is no winner in some year. Is that because the finalisst didn't play well? I watch their performances on YouTube and they are actually quite good.
With any competition, you start with a large(r) group, and (usually) through a series of levels, you narrow down the field to a select few who you have not eliminated to be eligible to win the grand prize. Those are the finalists. The winner is chosen from among the finalists.
Why would a competition have no winner? In some competitions, unlike sports, the winner isn't just "this person is better than that person", it's "this person is better than all the rest AND is worthy of the award." The Nobels are an excellent example. There are years where there are no Nobel awards given because the committee decided there was no one worthy of winning one.