Labor is “sceptical” about breaking up supermarket giants amid warnings proposed powers could push up food prices and harm job security for workers.

As households struggle to pay for groceries, Woolworths and Coles are accused of price-gouging customers, stifling competitors while undermining suppliers.

The Albanese government has directed the Australian Competition and Consumer Commission (ACCC) to review prices and competition in the sector.

It also appointed former Labor minister Craig Emerson to review the effectiveness of the grocery code of conduct, which governs how the supermarkets treat their suppliers.

Assistant Competition Minister Andrew Leigh said the government would wait for the ACCC to hand down its report, but previous competition inquiries failed to recommend divestiture.

“The National Farmers Federation have argued against divestiture and the ACTU have made the point that it could potentially hurt workers, so we’re sceptical,” he told ABC’s Radio National on Monday.

Leigh said the government would not make a decision until it had the ACCC’s report.

Asked about divestiture in the US and UK, Mr Leigh said he wasn’t aware of other countries that had broken up supermarkets, with the powers rarely used in other industries as well.

“We don’t see that as being a significant tool in the fight against market concentration,” he said.

The Greens and the coalition are working separately on powers to break up the giants.

Nationals leader David Littleproud has called for divestiture powers to help increase competition in the sector, with supermarkets to be targeted specifically.

– AAP