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The competition regulator has knocked back Coles Group's (ASX: COL) bid to acquire a site in Kalgoorlie, Western Australia, for a new supermarket and Liquorland store, ruling the deal will likely substantially lessen competition in the regional mining city.
The Australian Competition and Consumer Commission (ACCC) handed down its determination after a Phase 2 assessment of the supermarket giant's proposed acquisition of a leasehold interest at 95-106 Great Eastern Highway in the Kalgoorlie-Boulder suburb of Somerville.
Coles had planned to build a 2,800sqm full-line supermarket and a Liquorland outlet on a vacant site being developed as a neighbourhood centre by M Holdings 4 Pty Ltd, a company owned by property group M/Group.
The ACCC found there was a "real prospect" the new Coles store would force an effective independent full-line competitor out of the market entirely, removing its assets and reducing competitive constraints on the major chains.
Kalgoorlie-Boulder is currently served by four large full-line supermarkets - one Coles, one Woolworths and two independents - along with two smaller independent supermarkets.
"We conducted extensive inquiries and analysis of material provided by Coles and third parties, and assessed the likely competitive effects of the acquisition on competition in the retail supply of groceries in Kalgoorlie,” says ACCC deputy chair Mick Keogh.
“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.
“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."
Keogh says that new entry into the Kalgoorlie grocery market will not be "timely enough and sufficient" to replace the competitive constraint that will be lost if an independent operator is driven out.
“Based on our assessment of all of the material before us, we are satisfied that there is a real commercial likelihood that Coles’ proposed acquisition would substantially lessen competition in Kalgoorlie in the longer-term, to the overall detriment of consumers,” he says.
The determination comes amid heightened regulatory scrutiny of the supermarket sector following the ACCC's 2024-25 supermarkets inquiry, which examined competition dynamics between major chains and independent operators across Australia.
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