The government must ignore pressure from the multiples and allow local shops and wholesalers to submit evidence to the supermarket ombudsman, the ACS has claimed.

Supermarkets have argued an ombudsman, promised by the coalition, should hold an arbitration role and that only they and their direct suppliers should provide evidence and raise issues. However, the ACS wants the regulator to seek out non-compliance, with local shops and wholesalers providing tip-offs on code breaches.

"Such a shut out would be a terrible mistake," said ACS CEO James Lowman.