The Australian government is tightening regulation of the country’s powerful supermarkets, with the threat of potentially billions of dollars in fines if they squeeze farmers and other suppliers on price. 

The government said it would push through legislation to enforce a mandatory code of conduct on large food retailers, including Woolworths and Coles Group, which control about 65 per cent of the market. Breaches would result in fines ranging from A$10mn (US$6.6mn) to up to 10 per cent of turnover over a year-long period.

Michael Simotas, an analyst with bank Jefferies, said the penalties for bad behaviour could be as much as A$5bn for Woolworths and A$4bn for Coles. He expected the companies would remain “front and centre of media and political commentary”.