Collision avoidance is not a function of the transponder. ADS-B merely communicates the position of local traffic.
ACAS is responsible for determining the vectors for the aircraft and the local targets. If there is a collision path calculated, ACAS then communicates with the target's ACAS to determine which way each aircraft is going to move. The pilot is then responsible for executing this action.
From the linked article and the slide deck, I've determined that the only thing exploited was the simulator software, which was running on a machine that the group already had full access on. There's no avionics being used in this. They're 'simulating' a set up with commercial PCs and training software. They're using the two communications standards, ADS-B and ACARS to communicate to a 'box' that they already had control over and already hooked into.
ACAS is responsible for determining the vectors for the aircraft and the local targets. If there is a collision path calculated, ACAS then communicates with the target's ACAS to determine which way each aircraft is going to move. The pilot is then responsible for executing this action.