Yep, Pepper is establishing his dominance. You have to make sure Joey knows that you are Pepper's boss, the "Alpha dog".
I read an article that said you can let them know who is the boss by pouring a bowl of food and putting your face near it (as if you were gonna eat it). When they know you are in control, you allow them to eat. You have to make shure that they know that you are allowing them to eat. Pepper is doing the exact same thing when he gives the bone to Joey.