Coles has demanded access to evidence used to support claims it could force the closure of a competitor by opening a second supermarket in a regional city.

The competition watchdog used new powers on July 1 to block Coles from developing a new supermarket at Kalgoorlie in Western Australia.

The outback city’s 30,000 residents are currently served by four supermarkets: A Coles, a Woolworths and two independents.

The Australian Competition and Consumer Commission rejected the second Coles on the grounds it could force the closure of smaller competitors in the gold mining city about 600 kilometres east of Perth.

Both the regulator and Coles, as well as legal counsel for IGA, attended a brief hearing in the Federal Court in Melbourne on Tuesday.

Barrister Tim Rogan, acting on behalf of Coles, said the commission blocked the proposed lease acquisition because of a “theory of harm” – a belief it would effectively lessen competition in Kalgoorlie.

He said that was based on the belief the new supermarket would take away choice for consumers and force the closure of an independent supermarket already operating in that town.

But Coles was not given the opportunity to view the information that the commission based its decision on, nor was it able to respond to such claims, the court was told.

“It became clear in the commission’s reasons that those two theories of harm were not substantiated,” Rogan said.

“Some of that information wasn’t supplied to Coles at the time of the determination, but there is provision for more information to be provided.”

IGA’s lawyer said they had received even less information.

It’s not the first time the watchdog has knocked back a supermarket acquisition.

In 2023, the regulator opposed Woolworths taking over an IGA in the NSW regional town of Queanbeyan.

But the action against Coles is the first refusal since it was granted new oversight powers in January.

Under the new framework, supermarkets must notify the watchdog whenever they plan to take over another location, secure a lease on a vacant building, or develop a greenfields site.

Coles previously had two supermarket sites in the town as recently as 2021.

When it opened its new $16 million store in central Kalgoorlie, it closed its other stores on Brookman Street and at the Hannans Boulevard Shopping Centre.

–AAP