The Coalition will take proposed legislation to the federal election specifically designed to smash the market dominance of Australia's supermarket duopoly if found guilty of practices such as predatory pricing, price gouging and market abuse.
Nationals leader David Littleproud said a deal was struck on Monday night with the Liberals that would introduce divestiture powers into law to increase competition and transparecny by reducing the stranglehold Coles and Woolworths currently have over the nation's retail markets.
The policy, that would include scaling and punitive punishments and seek to cover the supply chain from farm gate to supermarket shelves, was taken into the Nationals party room on Tuesday.
"I've struck an agreement with the Liberal party about us designing and constructing what will go to the heart of making sure that there is proper safeguards around divestiture," he told media.
"Particularly things like where there's real estate banking by the big supermarkets, to protect small independents and to grow competition, but also scaling penalties, punitive penalties into the tens of millions of dollars.
"As well as looking at cheap independent arbiters for suppliers and making sure that we have the ACCC (Australian Competition and Consumer Commission) agile enough to be able to look not only at the supermarkets, but also things like Bunnings for our nurseries."
He said the settings - a principal position of the Nationals for several years - would take in the Grocery, Dairy and Horticulture Codes of Conduct.
"That is why this is a complex policy issue," he said.
The Labor government, which has already ruled out introducing divestiture powers as Soviet-type overreach, would become a political outlier on the issue with the Coalition, Greens and independents lining up to introduce the "big stick" deterrent.
Mr Littleproud last week threw his support behind the intent of a Greens' private senators bill that proposed handing the ACCC economy-wide divestiture powers to use against big businesses, including supermarkets, banks and energy companies.
However, Mr Littleproud said he worked with Shadow Treasurer Angus Taylor on the Coalition version believing that the Greens proposal had "serious design deficiency" and could have unintended consequences, "in actually not increasing competition."
The UK and US have had divestiture powers for many years, while the competition agencies of Ireland, Italy and the Netherlands recently required the divestment of supermarket assets in order to increase local competition.
Coles, Woolworths and Aldi currently control 74 per cent share of the national grocery market.
A Senate inquiry will also soon report on the price setting practices and market power of major supermarkets. It has already heard many stories from farmers and farming groups on the impact of a "disproportionate" David versus Goliath style relationship between suppliers and retailers.
It is one of six probes currently delving into supermarket and supply chain issues.
