This has to do with “cartel theory”. There are two endpoints to simple markets, pure competition and pure monopoly. In pure competition, everybody keeps cutting price to the bare minimum, no producer makes “excess” profit. In pure monopoly, prices are raised until the point where the single producer makes the maximum total amount of profit, that is, they are raised until raising prices further causes a reduction in sales that outweighs the increase in profits on each sale.
Cartels are an attempt to create an artificial monopoly by having each individual producer raise price (and reduce volumes) so that all producers can reap the additional profits. The trouble with cartels is that each individual producer has an incentive to slightly lower price and increase volume, they make more money because all the other producers are helping to keep prices elevated. If all of the producers act this way, you go back to competition, and all lose. Cartels require work, enforcement, to remain effective.
The cereal business looks like they were operating a pseudo-cartel, with all the producers acting to keep prices elevated on a wink-wink basis. Nothing official, no illegal collusion, just each major operator recognizing that higher prices are better for everyone, so nobody is going to kill the golden goose by lowering prices. Until Post has a marketshare problem (presumably) and decides to try and improve their position by lowering prices, and everyone lowers prices to match. Post may have made more money for a while, or at least solidified their position in a less profitable market.