Independents and wholesalers will submit more evidence to the Competition Commission groceries inquiry to prove the existence of the waterbed effect.

Following a meeting between the ACS, the FWD and the inquiry team, ACS chief executive James Lowman said the Commission "needed to do more to analyse the distortions caused by the supermarkets on the wider grocery market".

The waterbed theory claims pressure by supermarket buyers on suppliers for better terms means manufacturers charge wholesalers more to make up margins.