Supermarket behemoths Coles and Woolworths have come under increasing scrutiny as critics accuse the retailers of price gouging and reporting record profits while customers struggle to pay for groceries.
In response, the Greens have pushed a Senate bill that would introduce divestiture powers into competition law and allow the government to step in and break up food retail giants.
This could reduce Coles and Woolworths market domination and stop them from raising prices for consumers while underpaying farmers.
The proposal may prove popular with Nationals and some independents but Business Council of Australia chief executive Bran Black claims it will exacerbate financial pressures and risk jobs.
Bran Black says divestiture laws could actually increase supermarket prices for consumers. (Bianca De Marchi/AAP PHOTOS)
"This proposed law doesn't solve the issues currently being reviewed, including price transparency from farm gate to the shelf, and nor does it take pressure off inflation," he said,
"Trying to rush through laws which have considerable unintended consequences, including harming consumers with increased prices, is not the answer."
Mr Black pointed competition policy reviews like the 2015 Harper Review, which warns that divestiture laws that are too general could have "negative flow-on effects to consumer welfare".
They would also allow the courts and consumer watchdog to make decisions about which businesses and jobs go, Mr Black said.
But similar laws already exist in the United Kingdom, the United States, Ireland, Italy and the Netherlands, and former Australian Competition and Consumer Commission chair Allan Fels has supported similar proposals.Â
Prime Minister Anthony Albanese has dismissed the prospect of divestiture laws, saying Australia is "not the Soviet Union", while the Liberals have not clarified their position on the proposal yet.
However, the government has put pressure on the major supermarkets, launching a parliamentary inquiry and at least two external investigations.
A review of the Food and Grocery Code of Conduct, which governs the relationship between supermarkets and producers is underway.
The consumer watchdog has also been calling for an inquiry into supermarket prices.
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