Product price hike fears over supermarket smash-up laws

Supermarkets and big business are warning against laws that could break up major chains, arguing it could ultimately cut competition and jack up prices.

The Greens have proposed legislation that would allow the consumer watchdog to force major food retailers, big banks and energy giants to sell assets, reducing their market share and influence.

The "big stick" laws are backed by the Nationals and some independent MPs.

Nationals leader David Littleproud called on supermarket chains to back the changes, saying they had nothing to be scared about.

David Littleproud
Nationals leader David Littleproud has backed the Greens' "big stick' laws. (Lukas Coch/AAP PHOTOS)

"If you are as pure as the driven snow as you claim to be, then why wouldn't you help us draw up this architecture?" he told reporters in Canberra on Tuesday.

"Because if you're doing the right thing, they'll never be used."

The Greens will introduce their private bill in the Senate this week.

The Business Council of Australia has come out against the laws, saying the changes could result in the unintended consequence of consumers paying more at the check out.

"Given this bill's economy-wide reach, it could have a chilling effect on business investment and jobs across Australia at a time when we need to focus on growth and productivity," chief executive Bran Black said.

"Policies should not be rushed, particularly if they could negatively impact consumers and the unintended consequences risk business investment and growth."

Coles and Woolworths have been accused of strong-arming suppliers, stitching up farmers and shafting customers.

The retailers have defended their prices and relationships, saying they were trying to balance fair prices for producers against low prices for customers.

Woolworths pointed to the increase in competition from chains like ALDI and Amazon on top of giants like Bunnings, Chemist Warehouse and the Reject Shop.

It also highlighted comments from the chair of AUSVEG, who warned forced divestiture may result in regional areas not being serviced.

The Nationals want the changes to extend to land banking, where supermarkets buy property to squeeze out smaller competitors.

Prime Minister Anthony Albanese has ruled out introducing divestiture laws, likening them to the former Soviet Union.

The Liberals are not yet on board with their coalition stablemates in the Nationals.

"Conceptually, I'm not against divestiture powers," Liberal senator Simon Birmingham said.

"They play a role in major economies around the world.

"The detail of it is something that I would want to have a close look at."

The United Kingdom, United States, Ireland, Italy and the Netherlands have similar laws.

The laws would stop supermarkets price gouging, Greens senator Nick McKim said.

"The market domination of Coles and Woolworths gives them the power to crush farmers, squeeze out competition and shaft their customers," he said.

The major supermarkets are under pressure on several fronts, with a parliamentary inquiry and at least two external investigations underway.