First ACCC rejection under Australia’s new merger regime: What it means for supermarkets and their landlords

On 30 June 2026, the Australian Competition and Consumer Commission (ACCC) determined that Coles could not proceed with its proposed acquisition of a leasehold interest over a site in Kalgoorlie, Western Australia, where it intended to develop a second full-line supermarket and liquor store.

As the first formal rejection under Australia's new mandatory merger regime, the decision provides important insight into how the regulator intends to exercise its expanded powers, particularly in respect of the major supermarkets Coles and Woolworths.

The significance of the decision is further highlighted by Coles' decision to appeal the ACCC's determination. Coles has reportedly argued that the decision could have broader implications for future supermarket developments and expansion projects.

Regardless of the outcome, the matter represents the first real test of the ACCC's powers under the new merger regime and provides important insight into the regulator's current approach to merger enforcement in respect of supermarkets.

The Coles transaction in brief

Coles proposed to acquire a lease over vacant land and develop a new supermarket and liquor store in Kalgoorlie.

The supermarket voluntarily notified the ACCC about the transaction in November 2025, before the introduction of the new merger control regime.

At first glance, the proposal seemed pro-competitive. It involved significant new investment, an additional supermarket, improved retail amenity, increased consumer choice and importantly, Coles was not acquiring an existing competitor.

Yet the ACCC prohibited the transaction.

Why did the ACCC oppose the transaction?

The ACCC's concerns were driven largely by the unique characteristics of the Kalgoorlie market, namely:

• Kalgoorlie is a relatively small and geographically isolated regional centre with a population of approximately 30,000 people
• the ACCC considered that population growth was modest, barriers to entry were significant, and replacement entry would be unlikely to occur quickly if an existing competitor exited.

The ACCC concluded that the new Coles store would likely divert a substantial volume of sales away from one of the existing independent supermarkets. While Coles argued that this represented ordinary competition on the merits, the ACCC considered there was a real commercial likelihood that the resulting loss of sales would cause that competitor to exit the market.

The ACCC’s concern was not simply that a competitor might suffer commercial harm, but that the loss of an effective independent supermarket would increase market concentration, reduce consumer choice and remove an important competitive constraint on the remaining supermarkets.

What does the decision tell us about the ACCC’s approach?

The ACCC’s rejection provides an early indication of how the regulator is likely to approach merger assessments under the new regime.

Key lessons for businesses include:

• the ACCC is willing to oppose transactions involving new investment, new capacity and greenfield developments, even where there is no acquisition of a direct competitor
• the ACCC will focus on the likely future competitive effects of a transaction, not merely its form or immediate benefits. A transaction may raise concerns even where it increases consumer choice or capacity in the short term
• merger assessments extend well beyond market share and price effects. The ACCC may place significant weight on non-price factors such as service quality, product differentiation, innovation, local offerings, convenience and consumer choice
• regional and remote markets attract heightened scrutiny. In smaller and more concentrated markets, the loss or weakening of a single competitor may be sufficient to substantially lessen competition because there are fewer alternatives and more limited prospects for new entry
• supermarket lease transactions can be merger events. The ACCC has demonstrated it is prepared to closely scrutinise the acquisition of leasehold interests and development opportunities by supermarkets, not just acquisitions of existing supermarket businesses.

What does this mean for supermarkets and those leasing to supermarkets?

The decision has important implications for supermarket operators seeking expansion opportunities. It is also equally relevant to landlords, shopping centre owners and developers negotiating with supermarket tenants.

The new merger regime places supermarkets in a unique category. While many land transactions may benefit from exemptions that apply to ordinary commercial leasing activity, Coles and Woolworths are subject to targeted notification requirements specifically designed to capture certain supermarket land and lease acquisitions. Parties involved in supermarket developments should therefore be cautious about assuming a proposed lease will be treated as a routine property transaction.

The risks are not limited to supermarket operators. Landlords, developers and shopping centre owners involved in leasing transactions with major supermarket chains also have a direct interest in ensuring merger control requirements have been properly assessed.

Parties involved in supermarket leasing transactions should consider:

• whether the proposed supermarket will operate in a regional, remote or highly concentrated market
• whether the development could weaken the viability of an existing competitor
• whether ACCC review may delay project delivery, lease commencement or development timelines
• how ACCC approval risk is allocated between the parties
• whether appropriate conditions precedent, sunset dates and termination rights are included in transaction documents.

For landlords and developers leasing to supermarkets, competition law should now form part of the early assessment of major supermarket developments, particularly in regional markets where competitive impacts may be magnified.

A reminder that section 50 still applies

Since the commencement of the new merger regime, much of the market's focus has been on notification thresholds, mandatory filing requirements and exemptions.

The Coles decision is a timely reminder that businesses should not view merger compliance solely through notification obligations.

The new merger regime introduces a mandatory and suspensory approval process for certain transactions, but it does not replace section 50 of the Competition and Consumer Act 2010 (Cth). The critical question remains unchanged: Will the transaction have the effect, or likely effect, of substantially lessening competition in a market?

Consequently, competition law risk may arise even where notification thresholds are not met or the parties consider the transaction to be commercially benign.

Every acquisition of shares or assets, including certain land, leasehold interests and development rights, should therefore be assessed for competition law risks before implementation.

The consequences of getting it wrong can be significant. Transactions may be delayed, subjected to extensive ACCC investigation, prohibited entirely and expose parties to substantial regulatory and commercial risk.

Final thoughts

The Kalgoorlie decision, and Coles' subsequent appeal, will be closely watched by businesses across Australia. Whatever the outcome, the case has already provided the ACCC's clearest indication yet of how it intends to exercise its powers under the new merger regime and, in particular, how it will approach acquisitions by major supermarket operators.

For supermarkets, landlords leasing to supermarkets and developers seeking supermarket tenants, competition law analysis should now be undertaken from day one. The key question is no longer simply whether ACCC notification is required, but whether the proposed transaction could attract ACCC scrutiny and ultimately be viewed as creating, strengthening or entrenching market power, or otherwise substantially lessening competition.

Before pursuing any acquisition of shares, assets, businesses or land interests, parties should ask:

• does the transaction require notification to the ACCC?
• could it raise concerns under section 50 about whether the transaction may substantially lessen competition?
• how will the ACCC view the competitive impact of the transaction?

For more information about this decision, see the ACCC’s statement here and Coles’ appeal against the decision here.

If you are considering an acquisition, lease or development and would like to discuss whether it may trigger ACCC notification requirements or raise competition risks, please contact us here.

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future. 

Published by:

Suzanne Howari

Share this