Australia's ACCC Blocks Coles Supermarket Opening in Kalgoorlie

In an unprecedented move, Australia's consumer watchdog has exercised new powers to block the opening of a Coles supermarket, on the grounds it could knock out smaller competitors in the surrounding region.

Coles has been wanting to open a second supermarket and a Liquorland in the nation's biggest outback city, Kalgoorlie.

The town already has a Coles, Woolworths, two franchised IGA supermarkets, and two independent grocers.

The Australian Competition and Consumer Commission (ACCC) has been assessing Coles' acquisition of a site near Kalgoorlie's airport for the last six months, under new notification and assessment powers it has been given to monitor supermarket competition.

"The ACCC is satisfied that the acquisition, if put into effect, would, in all the circumstances, be likely to have the effect, of substantially lessening competition in a market," the consumer watchdog has announced today.

The ACCC's deputy chair described the watchdog's investigation into the acquisition as "extensive".

“Independent supermarkets are an important competitive constraint on the major supermarket chains. They provide consumers with meaningful choice, competition on service, quality and range, and competition on price for some products,” Mick Keogh said.

"New entry would not be timely enough and sufficient to offset the loss of competition likely to result from the acquisition."

Coles has hit back, with the ASX-listed company saying it is considering "next steps".

Under the new oversight powers, Coles could take the ACCC to the Australian Competition Tribunal for an appeal overseen by an economist, a businessperson, and a judge.

"We disagree with the ACCC’s decision," a Coles spokesperson said.

"The ACCC has underestimated Kalgoorlie’s future growth and demand.

"Kalgoorlie is experiencing significant industrial activity, planned residential growth and comprises a substantial FIFO workforce, all of which are increasing demand for supermarket capacity across the region."

"As we demonstrated to the ACCC through extensive evidence, Coles' business case for this store does not rely on any existing operator leaving the market. Rather, it assumes continued growth among competitors over time."