Woolworths says it had no plans to sell beer for $28 a carton, but that has not stopped politicians and consumer groups from praising Foster's decision to temporarily withdraw supply.

As beer delivery trucks rumbled through the night last month their drivers received an unusual message.

Foster's told them they were to stop delivering product to the major supermarket chains and other retailers.

The company heard that Coles and Woolworths were planning to sell top-selling brands such as VB for as little as $28 a carton.

Foster's believed that was what is known as loss-leading behaviour - a tactic to dramatically cut prices on a popular product to get shoppers into stores.

The brewer believed that could damage the reputation of its brands.

Family-run South Australian brewer Coopers says it has obtained legal advice supporting Foster's position that a product can be withheld if it is being sold below cost.

It says such heavy discounting can cause substantial brand damage, especially to products marketed as premium quality.

"We are aware that from time to time some retailers engage in discounting which reduces the price of our beer to below the offered wholesale price," the company's chairman Glenn Cooper said in a statement.

"We are always concerned at how this impacts on our brand equity because of the confusion it creates in the mind of the consumer as to the appropriate price of the product."

Jos De Bruin is the CEO of Master Grocers Australia, which represents small, medium and large independently owned supermarkets around Australia.

He told ABC Local Radio in Melbourne that they are being left powerless by the major chains' cost-cutting.

"I don't think anyone can do anything about it other than the competition regulator, so this is something that needs to be looked at from maybe a reintroduction of section 49 of the consumer and competition law which is all about anti-competitive price discrimination," he argued.

"I mean, maybe those sorts of things need to be introduced to help us better understand what is going on here."

Jos De Bruin says consumers' joy at cheap beer would not last long.

"The consumer may win in the short-term but, as these below-cost promotions drive the independent sector out of business, sooner or later the consumer won't have any choice, and they'll be paying whatever the chains want them to pay," he added.

Price war tag 'misleading and incorrect'

A Woolworths spokeswoman told the ABC that it was inaccurate to say that Woolworths and Coles control the liquor industry in Australia.

She said the independent retailers are especially aggressive in cost-cutting.

Woolworths also says it had no intention of selling the beer lines in question at $28 a carton.

"The inference that beer is the subject of a new price war between Woolworths and Coles is misleading and incorrect," it noted in a statement.

The retail giant also says the halted deliveries only affected one Foster's product.

"Recent supply measures taken by Fosters Group were temporary, non-disruptive and, according to assurances given us by Foster's, applied to all retailers equally," the statement noted.

"Specifically in Woolworths' case, it concerned two deliveries of a single product (Carlton Draught) several weeks ago."

Coles is yet to comment.

Independent Senator Nick Xenophon shares the concerns of smaller retailers. He told ABC Local Radio in Sydney he supports Foster's decision to withhold the beer supply for a few days.

"Foster's did the right thing, and I guess Foster's is big enough and ugly enough to look after themselves," he said.

"This really is a case where Coles and Woolworths are so big, with 80 per cent of the market share - you know, in liquor, in petrol, in groceries - where you really have to say enough is enough.

"Do we need to look at US-style laws which would force divestiture so that no two companies can control more than 40 per cent of the market?"

Senator Xenophon wants the competition watchdog to act.

"The first thing that we need to do is to make sure that the ACCC takes action on things such as below-cost pricing, let alone the issue of selling booze below-cost and all the social implications of that," he added.

"But it seems, I think, the ACCC is in some cases worse than a toothless chihuahua when it comes to enforcing these things."

Consumer advocacy group Choice has been warning that the current milk price war being waged by the major supermarkets will disadvantage farmers, processors and consumers in the long run.

Spokesman Christopher Zinn says Foster's wields a lot more power than some of the player in the milk business.

"It was the market power of Foster's - [a] big brewer - big enough to say, 'look, we're not going to stock you' - that has stopped this particular deep discounting in its tracks," he said.

"The problem is the dairy farmers haven't been able to do that... and we think it shouldn't depend on how much market clout you have to determine whether a discount goes through or it doesn't go through, and this points to an inadequacy in our legal system in terms of predatory pricing."

Mr Zinn says Foster's next action should be to make sure independent liquor stores get the same price as the major supermarkets.

"One thing we'd like to see is Foster's offering their products to independent retailers on similar terms to those which they do to the big two supermarkets," he said.

"We are very keen, and we know that many consumers are as well, to make sure that the independent sector stays viable.

"Should this beer discount have worked, should it have been prolonged, if my friendly bottle shop which I might stagger around the corner to get the odd bottle of red wine when I run out suddenly isn't there in a couple of years - we've really only got ourselves to blame."

The Australian Competition and Consumer Commission told the ABC it had no comment at this stage.