ACCC Blocks Coles’ Kalgoorlie Supermarket: A Landmark Decision Under the New Merger Regime

On 30 June 2026, the Australian Competition and Consumer Commission (ACCC) blocked Coles Supermarkets Australia Pty Ltd (Coles) from acquiring a leasehold interest to develop a new supermarket and liquor store in Kalgoorlie, Western Australia.

It is the first supermarket transaction prohibited under Australia’s new mandatory merger control regime, which came into force on 1 January 2026.

The decision signals the ACCC’s readiness to use its enhanced powers to resist “supermarket creep” in regional and concentrated markets, and has significant implications for major retailers, property developers and the grocery sector more broadly.

The facts

The proposed transaction concerned a vacant site at 95-106 Great Eastern Highway, Somerville, on the western outskirts of Kalgoorlie.

Coles sought to acquire a leasehold interest over the site to construct and operate a full-line supermarket of approximately 2,800 square metres together with a Liquorland store.

The site formed part of a broader neighbourhood shopping centre proposed to be developed by M Holdings 4 Pty Ltd, a vehicle associated with Perth-based developer M/Group.

Kalgoorlie sits at the heart of the Goldfields region of Western Australia, around 600 kilometres east of Perth, with a population of approximately 30,000 and an economy driven predominantly by the mining industry.

At the time of the review, the city supported six supermarkets: four full-line operators in Coles, Woolworths, Spudshed Kalgoorlie and O’Connor Fresh IGA, together with two smaller format stores in Hannans FoodWorks and IGA Lionel Street. The market was already well-supplied relative to the size of the local population.

Coles notified the ACCC of the proposed acquisition in November 2025, and it was assessed under the new mandatory regime. As a “major supermarket”, Coles is required to notify the ACCC of any acquisition of a leasehold interest over vacant land exceeding 2,000 square metres, regardless of whether the general monetary thresholds are otherwise met.

Following a Phase 1 review, the ACCC determined in January 2026 that the acquisition warranted a more detailed Phase 2 examination and issued a Notice of Competition Concerns on 5 March 2026.[1]

The ACCC’s decision

Under the new merger regime, the ACCC has power to block an acquisition if it is satisfied that the acquisition would, or would be likely to, substantially lessen competition in any market. This forward-looking test, set out in section 51ABZE(1) of the Competition and Consumer Act 2010 (Cth), requires the ACCC to assess the likely competitive effects of the acquisition in all the circumstances.

Having concluded its Phase 2 assessment, the ACCC was satisfied that Coles’ proposed acquisition would be likely to have the effect of substantially lessening competition in the retail supply of groceries by supermarkets in Kalgoorlie.

The ACCC acknowledged that the proposal would deliver some pro-competitive benefits, including:

• a new supermarket offering;
• improved convenience for some consumers; and
• increased supermarket capacity. However, it concluded that these benefits would be outweighed by the likely long-term reduction in competition resulting from the exit of an existing independent supermarket competitor.

Coles contested the ACCC’s findings, submitting that demand growth in Kalgoorlie, driven by population growth, housing development, mining activity and fly-in, fly-out workers, would sustain the proposed supermarket without causing an existing competitor to exit. It argued that any temporary oversupply would reflect the inherently “lumpy” nature of supermarket investment, and that any competitor exit would reflect competition on the merits rather than an anti-competitive outcome.

Coles publicly disagreed with the determination and, on 16 July 2026, lodged an application with the Australian Competition Tribunal for review. A spokesperson stated that Coles “respectfully disagrees with the ACCC’s assessment” and maintains the development would not substantially lessen competition in Kalgoorlie. Coles also warned the decision may have broader implications for future supermarket developments under the new merger regime and noted the development would have supported approximately 120 local jobs.

Key competition considerations

The ACCC defined the relevant market as the retail supply of groceries by supermarkets in Kalgoorlie. Given Kalgoorlie’s remoteness and the lack of adjacent population centres, the ACCC concluded that population growth is a key driver of overall grocery demand. As the best estimates of population growth were below one per cent, the ACCC considered whether the acquisition may result in existing competitors becoming unviable and exiting the market and concluded that the market could not readily draw shoppers from elsewhere.

The ACCC’s theory of harm was that the proposed supermarket would divert sufficient sales from existing competitors to force an independent supermarket out of the market. The ACCC considered that the independent supermarket most likely to exit offered a differentiated proposition, including local products, extended trading hours, strong customer service and locally responsive pricing, which provided an effective competitive constraint on the major chains. Its exit would increase market concentration, with Coles operating two of the four full-line supermarkets and the combined Coles and Woolworths share of gross lettable area rising from an already high 62%.

Importantly, the ACCC emphasised that its role under the merger regime is to protect the process of competition, not to protect any particular competitor. However, it observed that there are situations where the exit of a single competitor can materially affect the state of competition, particularly in small, isolated or concentrated markets. The ACCC further found that it was not necessary for the acquirer to have a predatory intent or strategy for the acquisition to substantially lessen competition – the Act requires the ACCC to look at likely effects.

Key takeaways

• The decision has immediate implications for major supermarket expansion strategies. If the ACCC is prepared to block a new store on vacant land in a regional city (as distinct from an acquisition of an existing competitor’s business), the scope for Coles and Woolworths to grow through new store openings in smaller or concentrated markets is materially constrained. The ACCC will likely approve sites only where the market is growing sufficiently to sustain an additional major supermarket without causing an independent operator to exit.
• The decision also carries significant consequences for property developers:
  • Developers who rely on Coles or Woolworths as anchor tenants to underpin new shopping centre developments now face the risk that the ACCC may block the relevant lease acquisition.
  • This introduces a new layer of regulatory uncertainty into project feasibility assessments, particularly for developments in regional areas.
  • The additional costs this regime will impose on property developers should not be under estimated.
• More broadly, the decision confirms that the ACCC will apply its new powers with reference to longer-term competitive dynamics rather than short-term consumer benefits.
• Acquirers caught by the mandatory notification regime must ensure their transaction documentation is structured to accommodate the ACCC process. The acquisition contract should include:
  • a condition precedent to completion requiring ACCC clearance;
  • mutual cooperation obligations;
  • appropriate termination rights if the ACCC opposes the transaction; and
  • confidentiality arrangements accommodating the release of information to the ACCC and publication on the Acquisitions Register.
• Acquirers should also be prepared to engage with the ACCC’s counterfactual analysis. The ACCC assesses competitive effects by comparing the likely state of competition with and without the acquisition, with the counterfactual typically being the status quo. Acquirers should gather robust evidence on market demand, likely competitor responses and barriers to new entry to address this analysis.

Thanks to Lavan law graduate Charles Maxwell for his research and contribution to this article.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.

Footnotes

[1] Australian Competition and Consumer Commission, Coles – Supermarket and Liquor Site in Kalgoorlie, WA: Phase 2 Determination (MN-01068, 30 June 2026).