Different bread rolls are pictured at ''Zwieback Fischer'', the eldest bakery in Dortmund, Germany
Different bread rolls are pictured at ''Zwieback Fischer'', the eldest bakery in Dortmund, Germany Reuters/Ina Fassbender

According to Senator Nick Xenophon, both independent companies and consumers can suffer because of the competition law in Australia.

The independent senator said that a part of the competition law would "cripple independent supermarkets." A large supermarket chain had an earlier campaign to sell bread at the cost of 85 cents for every loaf. Xenophon said that the "discounting gimmick," might seem "appealing" at the moment. However, it would damage the independent supermarkets in the long run as those had to get bread with a much higher price from their suppliers, ABC News reported.

Xenophon also said that independent companies and customers were going to suffer due to the on-going competition law in Australia. He said that it would hurt consumers and competition when independent companies were "pushed out of business." The price discrimination should be prohibited, he said, as that would "level the playing field" for everyone. Xenophon wants to reinstate the then-Section 49(1) of the Trade Practices Act. The section was discontinued in 1995.

The West Australian reported that Xenophon had been a "staunch critic" for discounted prices in the past by prominent supermarket chains which offered heavy discounts in petrol and milk. He is expected to introduce a private member bill to the Senate on the issue in November. Earlier in 2011, a Senate inquiry committee investigated that influence of Coles' discounted selling of milk on the dairy industry in the country. It was concluded that the sale of $1 milk was beneficial for the consumers. It was also found that the dairy industry in Australia had not been badly affected by it.

Xenophon, meanwhile, said that he hoped for the introduction of a legislation which would be based on the Section 49(1) of the Trade Practices Act that had long been discontinued. "Next month, I will be putting out a draft of these changes," he said, "I'll then seek consultation and I'm sure there will be some invested interests who will be very much against it." According to Xenophon, the bigger supermarkets were able to expand further after the sub-section had been removed. The independent retailers, on the contrary, suffered loss due to it.

Contact the writer: s.mukhopadhyay@ibtimes.com.au