Bombay Pizza made the first move to lower price.
It's because a larger and/or diversified business can mercilessly destroy all competition in a market by selling under cost and offsetting their losses with price hikes in areas where they face no competition until the competition in the new area gets wiped out from having to sell at or below cost. Once the new area is secure, the predatory company can then charge monopoly prices in that area as well and move on to sweeping a new area. Historically this was a common business tactic and was used to create some fairly large monopolies before it was outlawed.
You may be right that this is flawed, but I don't think you can dismiss it without a little more reasoning.
The argument against this is that certain tactics (such as predatory pricing) for achieving this are designed to produce a monopoly, and a monopoly results in higher prices and lower utility than a competitive market.
You're not a better business when you purposefully place yourself next door to an existing store and use corporate weight to temporarily price your product lower than your competition can sustain before you jack it up. Noted by the "We have enough power to wait them out." comment from the Two Bros guy.
The better business here is the Joey Pepperoni's whose owner refused to drop his price below his profit margin, but his business is likely relying more on long-term customers than it should have to because two business owners are being stupid, and one is being predatory.
The point here is that Walmart opening next door to your current grocery store, and pricing everything at a loss for 12 months to run the incumbent out of business and then price hiking everything over what the incumbent used to charge, doesn't make them the better business. It means they're the worse business because they're bad for the economy, bad for the community and bad for future business. Why? Because no store could open and survive next to a walmart if they were allowed to predatory price.