Retail giant Coles has been accused of subsidising its lower milk prices by raising its petrol prices.
News Ltd reports it has data showing that Coles petrol is consistently dearer than its competitors.
Independent senator Nick Xenophon says it is legitimate to ask if the extra profit that Coles is making from its petrol is being used to "prop up its discounts".
Coles has denied the claims, saying its supermarket and petrol station chains are stand-alone businesses and discounts in either branch are stand-alone offers.
A graph published by News Ltd indicates a rise in Coles' petrol prices when the supermarket began discounting products such as Sanitarium, Weet Bix, Handee Ultra Paper Towel 4 pack and Moro Extra Virgin Olive Oil in 2010.
"Petrol is one of the products people have to buy - so it makes sense that Coles would target it," Senator Xenophon was quoted as saying.
Woolworths says the data contradicts Coles' claims that it is discounting to help families.
