Mining town denied Coles store as watchdog tests powers
Supermarket giant Coles has been blocked from setting up a new store in a regional mining town in an unprecedented move to protect local rivals.
Australia’s second-largest supermarket chain is hoping to acquire the lease on a vacant site in Somerville, a suburb of the Goldfields town of Kalgoorlie-Boulder in Western Australia.
It has proposed turning the site into a full-service supermarket and liquor store, the second of its kind owned by Coles in the town.
After months of deliberations, the Australian Competition and Consumer Commission announced on Wednesday that it had blocked the proposal.
It was concluded that allowing the acquisition would force an independent competitor to exit the market and negatively impact consumer choice.
The decision is the first under new rules, which have been in force since January 1 and require major supermarket chains to notify the ACCC about certain purchases before they proceed.
ACCC deputy chairman Mick Keogh said the proposed development would provide some immediate benefits but would ultimately leave shoppers worse off.
“There is a real possibility that the acquisition will lead to the exit of an effective independent competitor and the withdrawal of its assets from the market,” he said.
“The new entry will not be timely or sufficient to offset the loss of competition that the acquisition may cause.”
The ACCC said Kalgoorlie’s isolated location and modest population growth meant the market could not support another major supermarket without forcing an existing rival to close.
Kalgoorlie-Boulder has around 30,000 residents and six supermarkets, including Coles, Woolworths, Spudshed, O’Connor Fresh IGA and two smaller stores.
The proposed 2,800 square meter supermarket would be built as part of a new neighborhood development in the city’s southwest.
The regulator concluded that the possible exit of an independent provider would reduce consumer choice and weaken competition.
Coles would later operate two of the town’s four full-service supermarkets, with Coles and Woolworths together accounting for a larger share of the market.
The supermarket giant argued that local shoppers and the local economy would be well served.
“We disagree with the ACCC’s decision,” a Coles spokesman told AAP.
The new store will create local jobs, improve access to a wider range of competitively priced products and will not require an existing competitor to exit the market.
They argued the decision underestimated Kalgoorlie’s growth prospects, including demand from the mining industry’s in-and-out workforce.
“We will review the ACCC’s decision and consider our next steps,” they said.
