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 in WA.
The city 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.
“We found that while a new Coles supermarket will offer benefits to some consumers, there is a real prospect that the acquisition would lead to the exit of an effective independent competitor, and its assets leaving the market.
“New entry would not be timely enough and sufficient to offset the loss of competition likely to result from the acquisition.”
The site of the proposed Coles development in West Kalgoorlie, neighboured by a childcare centre, FIFO accommodation village and industrial area. (ABC Goldfields: Jarrod Lucas)
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.
“Blocking the development of a new supermarket on a vacant site does not promote competition. It denies Kalgoorlie shoppers greater choice and convenience.”
There are already a number of supermarkets in Kalgoorlie, including an existing Coles. (ABC News)
Coles argues ACCC ‘underestimates’ Kalgoorlie’s growth
Famous for the discovery of gold in 1893, the historic mining city of Kalgoorlie-Boulder, about 600 kilometres east of Perth, has a bigger population than Alice Springs, Mount Isa and Broken Hill.
It is currently serviced by six supermarkets, including an existing Coles in the Kalgoorlie CBD.
“The ACCC has underestimated Kalgoorlie’s future growth and demand,” Coles said on Wednesday.
The O’Connor Fresh IGA is only 2.6km from the site of the proposed Coles supermarket. (ABC Goldfields: Jarrod Lucas)
The supermarket giant said the city was “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,” Coles said.
Coles previously had two Kalgoorlie stores
Coles previously operated two supermarkets in Kalgoorlie-Boulder, which is home to about 30,000 people.
Until June 2021, when Coles opened the new $16 million store in the Kalgoorlie CBD on Egan Street, the supermarket giant operated a Brookman Street location in the CBD, as well as a store in the city’s north-west corner at the Hannans Boulevard Shopping Centre.
The future of Coles’s former site on Brookman Street also remains contentious for residents.
It was initially earmarked for demolition and construction of a new Aldi supermarket and residential apartments to rejuvenate the CBD.
But after purchasing the 6,829-square-metre-site, the German-owned chain Aldi officially withdrew from the project in June 2023 because of cost blowouts.
The City of Kalgoorlie-Boulder has since acquired the site, which has remained vacant and been heavily criticised for attracting antisocial behaviour in the empty car park.