The type of configuration that would create such an industry is: having a large number of competitors in the market (with a variety of brands). ("Woolies denies existence of beer price," 2011) Hypothetically, if both firms go through with this strategy and succeeded (i.e. they drive out the remaining competition in retail), what would be a long run concern for at least one of the two firms? (Note, this is not a question about collusion).

The possibility that their other competitor; may engage in tactics that could undercut their market share. This is problematic, because it means that the other company could: dramatically cut prices or try to create shifts in consumer demand (through substitute products). ("Woolies denies existence of beer price," 2011)

Finally, Fosters is not exactly a small fish itself. Positive PR aside,...

When retailers begin reducing prices, this can have an adverse impact upon that image. From the company's view, engaging in these kinds of tactics will protect their underlying profit margins. ("Woolies denies existence of beer price," 2011)
Bibliography

Americans Start to Curb Their Thirst for Gasoline. (2008). WSJ.

The Long-Distance Journey of a Fast-Food Order. (2006). New York Times.

The Saudi Arabia of Lithium. (2008). Forbes.

Somali Pirates Hijack Tanker With Almost 2 Million Barrels of Oil Destined for U.S. (2011). Forbes.

Woolies denies existence of beer price. (2011). ABC News.