Supermarkets could face multimillion-dollar penalties under tough new legislation designed to curb price gouging, also known as excessive pricing.

The proposed laws are expected to come into effect by the end of the year and will draw from similar pricing rules in the UK and European Union, Assistant Competition Minister Andrew Leigh told reporters on Monday.

“The fines are $10m, three times the ill-gotten gains, or up to 10 per cent of the turnover,” he said.

“For multi-billion dollar companies, these are significant fines.”

Companies with more than $30bn in turnover will be subject to the laws, with Mr Leigh singling out giants Coles and Woolworths, who both hold a “significant market share” in the supermarket sector.

But Australian Retailers Association’s chief executive Chris Rodw

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