Coles, Woolies, Aldi, IGA to face $10m fines in 'cost-of-living crackdown'

"We're cracking down on anti-competitive behaviour in the supermarkets sector so people get fairer prices at the checkout," Treasurer Jim Chalmers said.

"This is about getting a fair go for families and a fair go for farmers."

The government is billing its changes to the Food and Grocery Code as "a wide-ranging cost-of-living crackdown on anti-competitive behaviour in the food and grocery sector".

But Greens economic justice Spokesman Nick McKim said the code of conduct "will do nothing to bring down food and grocery prices" and that the government must go further.

"Food and grocery prices won't come down unless we make price gouging illegal, and create powers to break up the supermarket duopoly," Senator McKim said.

"Divestiture powers exist in numerous free-market economies around the world, and the Chair of the Australian Competition and Consumer Commission has confirmed that greater competition in the supermarket sector would bring down food and grocery prices."

The changes announced by Dr Chalmers will fully implement the recommendations of a review into the voluntary code, which will be made mandatory with beefed-up enforcement powers for the ACCC.

The more harmful and systemic breaches will attract a maximum penalty of the largest of $10 million, three times the benefit gained or 10 per cent of 12 months' turnover.

It will apply to all supermarkets with annual revenue of more than $5 billion, meaning Costo may soon also be covered.

Fines of just over $1 million will apply for breaches of other substantive provisions in the code, which will also strengthen alternative dispute resolution arrangements such as mediation.

"Our efforts will help to ensure our supermarkets are as competitive as they can be so Australians get the best prices possible," Dr Chalmers said.

Economist and former Labor MP Craig Emerson undertook a review of the code after major concerns were raised about large supermarkets using tactics to squeeze farmers in breach of the voluntary code.

The review found the code was failing to address the imbalance of bargaining power between supermarkets and their suppliers.

The reforms will require amendments to the Competition and Consumer Act 2010.

Dr Emerson said he had introduced the $1 million fine category after feedback on his interim report.

The $10 million penalty "should apply to obligations on supermarkets to deal with suppliers lawfully and in good faith; have and retain written grocery supply agreements; train staff; and keep records," he said.

"These penalties would ensure supermarkets took compliance with their obligations under the code seriously."

The ACCC will also be able to issue infringement notices of $187,800 for lower-level breaches.