The deputy leader of the Nationals, Fiona Nash, has unleashed on supermarket chain Coles for suggesting that stronger protections for small businesses could drive up prices, calling it a “disgraceful” scare tactic.

On Wednesday, Coles’ managing director, John Durkan, warned that implementation of a so-called effects test – which cracks down on the misuse of market power by big business – may result in customers in rural areas paying more for their groceries.

Nash, who also holds the regional development portfolio, said Coles was treating its consumers like mugs.

“Rural and regional communities would be appalled to think Coles might charge them more for the food they produce to feed our nation than Coles charges people in the cities for that same produce. This kind of threatened, strategic discriminatory pricing is outrageous and runs against fair market competition,” she said.



“Rural and regional people are not stupid. They know they produce the food which feeds the nation. Rural customers will vote on this policy with their wallets. Trying to scare rural and regional people as a political tactic to avoid laws cracking down on bullying is disgraceful and I will not stand for it.”



Nash said the effects test, announced by the government earlier this month, was designed to stop big business from bullying smaller competitors.

“So long as I have anything to do with it, the Aussie concept of a fair go will live on and small business will get a fair go,” the minister said.

Coles’ profit increased by 6.6% in the 2014-15 financial year to $1.79bn.

Durkan told the Australian Chamber of Commerce and Industry that the effects test could mean that customers in the city pay less for their groceries because the cost of delivering the products is lower.

“I am concerned that under an effects test regime, companies like Coles will be less able to bring about cost decreases and therefore lower prices,” he said. “This is because another less efficient business may seek to argue that their inability to offer similar prices is somehow unfair.”

The Nationals had been pushing for an effects test, with three senators crossing the floor in September to vote for a Greens motion on the issue.

The test was a recommendation of the Harper Review into competition policy, released in March 2015.