Independent Bungendore grocer Darren Heathcote is appealing to the competition watchdog against Woolworths' proposed arrival in the village, which he fears will send him broke.
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Mr Heathcote's submission to the Australian Competition and Consumer Commission will say Bungendore is part of the Queanbeyan grocery market in which Woolworths already has two outlets, in Queanbeyan and at Majura Park near Canberra Airport, the biggest in Australia when it opened.
For three years Mr Heathcote negotiated with developer Canberra's Krnc Group to occupy a new site for his expanded supermarket, next to Le Tres Bon French restaurant in Malbon Street.
While waiting for the paperwork to be completed he was told a Woolworths supermarket and BWS liquor store would open there instead, in 2017.
Mr Heathcote says the Bungendore community has come out to support his cause, and a form letter to the ACCC attracted 300 signatures within 24 hours.
He says more than 90 per cent of Bungendore residents commute to Canberra for work and drive past the Woolworths stores at Queanbeyan, the airport and Dickson. "That brings them into our market effectively, the consumers in my area go past those stores every day," he said.
A recent survey for Palerang Council found only 4.6 per cent of Bungendore residents shopped in the village, he said.
Mr Heathcote said a similar case happened in South Australia, when Woolworths which operated at nearby Kadina, attempted to open at Wallaroo.
In this region, in 2008 an ACCC public assessment had ruled out Woolworths from buying a supermarket site at Karabar, between Queanbeyan and Jerrabomberra, because of the impact on competition.
"Since then the [Majura Park] store opened in 2012 increasing Woolworths' dominance in the region. Woolworths [Majura Park] is a destination site, no one lives nearby and the intention was to draw people from the other markets into it. That to me is a huge increase of dominance in that market," Mr Heathcote said.
Palerang councillor Garth Morrison says he was the only councillor to vote against the development application for a bigger supermarket site in Malbon Street, Bungendore. At the time, Woolworths had not been mentioned as the likely tenant.
Cr Morrison says a building of that size was always going to be occupied by a chain store.
"I couldn't see it going down any other way," he said.
He also opposed the development application because he believes the Malbon Street site changes the shopping arrangements of the village, drawing people away from other small businesses in Gibraltar Street. Staff would be left without a job.
Cr Morrison says he hopes staff get a job at the new supermarket.
Mr Heathcote's family has owned the IGA for 25 years. He says he is an independent operator, and part of the community, and while Metcash, a publicly listed company that operates across Australia is his main supplier, he owns the business, chooses his suppliers, range of goods, and who he employs.
