Two local retail landlords told an Assembly committee yesterday the controversial policy had failed in its most basic objective, to limit the expansion of the two major supermarket groups in the ACT.

But a government MLA said many of the business submissions to the committee inquiring into the policy seemed motivated by self interest.

The government's policy aims to use the planning system and ''direct sales'' of land to supermarket operators in an effort to break the stranglehold of the ''big two'', Coles and Woolworths, on grocery sales in the territory.

But Arthur Petsas of local property firm Argos Group told the committee yesterday the policy had failed to control expansion by Woolworths and Coles and had opened the door to allow the majors to expand into local centres.

Mr Petsas argued the expansion of majors into smaller centres endangered Canberra's decades-old ''local shops'' retail model.

''We do not support the current policy or the resulting ad hoc or piecemeal planning approvals approach with retailers using the approvals process to drive market share objectives,'' Mr Petsas said.

''The major supermarket chains have and will continue to exploit the lack of a comprehensive approach to competition issues through planning issues as a means of either maintaining or increasing their market share.''

Lawyer Chris Wheeler, representing the Nikias Group of companies, in an answer to questioning by committee member Zed Seselja, accused the government of picking winners through its policy and said the approach was risky.

''By choosing a winner-takes-all policy, the risk of that is that there are inherent distortions and are the costs of those distortions worth the risk?'' Mr Wheeler asked.

Australian National Retailers' Association, the group representing nationwide chains with annual turnovers of more than $100 million, said the government's policy was based on a flawed idea of a lack of competition in the market.

The Association's chief executive, Margy Osmond, was scathing of the ACT's policy, saying it was based on shaky assumptions.

''It doesn't understand or allow for those things that generate lower prices and a better deal for customers and consumers and it flies in the face of some significant reviews that have occurred in this space over the past few years,'' Ms Osmond said.

''The independent operators, whether we like it or not, nine times out of 10 will be charging higher prices.''

But ACT government backbencher John Hargreaves said he believed there was a ''thread'' of self interest running through commercial submissions to the inquiry by commercial organisations.

''Those businesses are saying what's in my business's interests, what position should I take, whether it be Tuggeranong Hyperdome, Coles, Woolworths and I suspect some of the others,'' Mr Hargreaves said.

''The thread is, they will either praise or criticise the planning regimes because it suits their business interests.''