27.3.3.2 Multi Master
A master can start a bus transaction only if it has detected that the bus is in the Idle state. As the TWI bus is a multi-master bus, more devices may try to initiate a transaction at the same time. This results in multiple masters owning the bus simultaneously. The TWI solves this problem by using an arbitration scheme where the master loses control of the bus if it is not able to transmit a high-level data bit on the SDA and the Bus State (BUSSTATE) bit field from the Master Status (TWIn.MSTATUS) register will be changed to Busy. The masters that lose the arbitration must wait until the bus becomes Idle before attempting to reacquire the bus ownership.
Both devices can issue a Start condition, but DEVICE1 loses arbitration when attempting to transmit a high level (bit 5) while DEVICE2 is transmitting a low level.