Their industry group, Master Grocers Association, chief executive, Jos de Bruin, says even though Supabarn was a valued member who had led the independent sector, his organisation would object to the deal to the Australian Competition and Consumer Commission.

Supabarn announced last month it was selling all its supermarkets in Canberra and NSW except Kingston, which was still being developed in partnership with CIC Australia and Gymea, Sydney.

Several industry commentators expect the sale would be approved, creating a more level playing field against Woolworths. One commentator said the ACCC didn't have enough power to intervene.

The ACCC is accepting submissions until July 20 on the deal, particularly on the closeness of competition between Coles, Supabarn and other operators and potential impact on grocery prices, specials, product quality, service levels or range of products.

"From an industry perspective it is quite daunting to imagine such a large independent retailer could no longer be," Mr de Bruin said.

"We do believe it will damage the independent supermarket sector from a number of different points of view, but please, this is purely and simply an industry viewpoint, we do understand very much the [Supabarn owners] Koundouris family and what they want to do.

"From an independent perspective, we are talking about a family-owned businesses, the way they support the local economy, sourcing local products, using local professions and trades, the money stays in the local economy. Whereas with Coles and Woolworths the money disappears out of Canberra, it finishes up in Tooronga (Victoria) or in Sydney."

Rodney Thompson, who develops supermarkets including IGAs in Canberra and NSW in partnership with John Krnc, believes the ACCC will approve the deal. He said Woolworths was the loser in the deal, but recently had a "big win" at Dickson when the ACT planning authority rejected the Coles/Doma partnership's development application.

Coles has eight supermarkets in Canberra and 262 in NSW, and under this deal will own other supermarkets in Canberra's CBD, Kaleen, Wanniassa, Crace and Casey and four in Sydney including Five Dock.

"Five Dock is the best buy, the golden egg in the hen house, " Mr Thompson said.

He expects Kaleen IGA's trading could suffer, and the buying power of Supabarn supplier and wholesale distributor Metcash to be hit as well.

"It [the Coles deal] has always been on the cards, I think the ACCC will approve it, Koundouris [family] has been in the game a long time, and all are good operators," Mr Thompson said.

"I'd be very surprised if it didn't get approved, unless you had a site sitting on one of the doorsteps of a Supabarn and you thought Coles were going to impact on you, I can't see too many other retailers or operators putting in objections."

Manual Xyrakis, whose family has owned Ainslie IGA Supermarket for 52 years, said Metcash would lose a big customer and was already having a struggle.

"It is always sad when an independent sells to a major organisation with an open-ended chequebook," he said.

ACT opposition's shadow planning minister, Alistair Coe, said the deal was more evidence of just how flawed the government's now discarded supermarket policy was. "The environment that it promoted may well have simply driven up the value of Supabarn, but done nothing for actual supermarket policy or actual supermarket choice."

Mr Coe said the opposition would not comment on the ACCC's review, but few people were surprised by the Coles move. The ACT government previously welcomed the deal, saying the 100 extra jobs would benefit the community. Eric Koundouris declined to comment.