The Coalition will introduce sector-specific divestiture powers "as a last resort" deterrent to stop major supermarkets from price gouging if it wins the next election and to "manage" mistreatment of suppliers.
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This would include serious allegations of anti-competitive discounting, threatening and unfairly passing costs onto suppliers and land banking, where one major supermarket buys up land to keep competitors out of an area.
The major policy announcement was made following a Coalition party room meeting on Tuesday and is set to heap pressure on Labor in the lead-up to a federal election amid a cost-of-living crisis.
The new measures would also include a supermarket commissioner to act an an "impartial confidential avenue" for farmers and suppliers to address fears of retribution for speaking out against supermarkets.
In a joint statement, Opposition leader Peter Dutton, Nationals leader David Littleproud and Shadow Treasurer Angus Taylor said "the time for this policy has come".
"Divestiture powers will address serious allegations of land banking, anti-competitive discounting, and unfairly passing costs onto suppliers," the statement said.
"The Coalition will stand up for Australian small businesses, farmers, and consumers by delivering stronger penalties for anti-competitive behaviour in the supermarket and hardware sectors. Competitive markets benefit everyone."
Mr Littleproud said the powers would act as a deterrent for big businesses in those sectors.
"It won't mean that tomorrow or when we get into government that we're going to break up the supermarket straightaway," he said.
"This is a deterrent. It is a deterrent to make sure they work within the regulatory guidelines."
The federal government last month accepted all 11 recommendations of a review into the Food and Grocery Code by former Labor minister Craig Emerson, including that supermarkets should not be forced to sell off stores but face hefty fines of up to $10 million, or three times the benefit gained from the contravening conduct, for breaching obligations to suppliers.
Both Labor and the Coalition have pledged to make the voluntary code of conduct that supermarkets authored themselves ten years ago mandatory for supermarket chains with annual turnover of more than $5 billion for the current signatories - Woolworths, Coles, Aldi and Metcash.
Under the Coalition's plans, supermarkets would face infringement notices of up to $2 million for contraventions of the Code.
"Tougher civil penalties for supermarkets will apply to contraventions of the mandatory industry code, starting from $10 million," the statement said.
Dr Emerson rejected divestiture as a "populist" idea that could lead to job losses and trigger further store closures.
However, the Coalition said it would develop safeguards to ensure a forced sale of assets would not trigger a loss of jobs or services.
The Greens also advocated for divestiture powers to be created in a private members' bill tabled in April that would arm the corporate watchdog with powers to force Coles and Woolworths to sell parts of their operations if found guilty of practices such as predatory pricing, price gouging and market abuse.
