By Kat Wong

Supermarkets that abuse their market power could be fined or broken up under an opposition proposal being unpacked in parliament.

In a bid to tackle anti-competitive behaviour, the coalition has drafted laws that could decrease costs at the check-out and increase the range of grocery providers in Australia.

The market share of Woolworths and Coles has increased 3.6 per cent since 2002 and accounts for about 67 per cent of supermarket sales.

Introducing the bill in the House of Representatives, Shadow Treasurer Angus Taylor said it would put the major retailers on notice.

“If a consumer has competition, they regulate the market, and they regulate it via the choices they make every single day,” Mr Taylor said on Monday.

“Competition is far better than anything any regulator can do here in (Canberra).”

The legislation would give the courts divestiture powers to force the break up of large supermarkets and hardware businesses.

To prevent potential job losses, price increases or negative impacts on shareholder value, divestiture would only be allowed if it substantially increased competition, or was in the public interest.

The laws are intended to be a deterrent rather than a weapon.

“This is a last resort for egregious behaviour and there are many, many other penalties that can be imposed along the way,” Mr Taylor said.

Addressing competition would allow international and smaller domestic brands to expand their presence in sectors dominated by Woolworths, Coles or Bunnings.

This would be especially beneficial to under-served areas in the regions and put downward pressure on prices, Nationals leader David Littleproud said.

“What we’ve seen is the supermarkets have been gaming that ignorance of Australians not knowing what’s happening at the farm gate price, and they’re playing on that at the shelves and at the check-out,” he told AAP.

“If there’s a reduction at the farm gate, you should see a commensurate drop at the check-out.”

The coalition claims the Labor government had failed on competition policy by refusing to adopt divestiture reforms.

Labor argues extra funding for the consumer watchdog, changes to merger laws and a mandatory supermarket code of conduct all help increase fair competition and reduce unnecessary price hikes.

“We won’t stand by as supermarkets and retailers take advantage of the people that they are meant to serve,” Labor MP Sam Rae said.

The Australian Competition and Consumer Commission has taken Woolworths and Coles to court over allegations their discount campaigns misled shoppers.

It claims supermarkets increased the prices of hundreds of products before dropping them to a cost that was still higher than the regular price.

The grocery giants have claimed the accusations were misconceived.