Aldi's push to build a store next to the Fyshwick Fresh Food Markets was rejected by the ACT's planning directorate in 2018.
A proposal for a territory plan variation to allow for a supermarket on the site at 11 Nyrang Street was refused in March 2018, documents released under freedom of information show.
Aldi has since held a consultation for the proposed store on the industrial block, which was widely opposed by stallholders at the Fyshwick Fresh Food Markets.
The German-owned supermarket giant has looked to establish a site along the Canberra Avenue corridor since 2016.
Two Aldi directors met with ACT Planning Minister Mick Gentleman in late-2018 to discuss the possible site.
The talking points of this meeting were the documents released under freedom of information.
According to the documents, one of the reasons the directorate had rejected the proposal was due to impacts on existing surrounding commercial centres.
Other reasons included a lack of population to justify a supermarket in the zone, a limited supply of industrial-zoned land, traffic and parking issues and the need to protect the "retail hierarchy of centres" across Canberra.
Instead, the directorate suggested Aldi should investigate the possibility of a supermarket in Kingston, which Aldi was considering.
The documents showed Aldi had claimed the ACT's planning directorate had been "less willing to engage" about the proposed supermarket sites.
Aldi managing director Alexander Foster and Aldi property director Brendan Smith met with Mr Gentleman on November 22, 2018, to discuss the possibilities of a supermarket in the inner south.
Aldi has since pressed ahead with plans for a supermarket on the Fyshwick site. Earlier this year, the supermarket giant held community and stakeholder consultation on the proposal.
A spokesman for Mr Gentleman said the directorate was considering a request from Aldi but still had concerns about the Fyshwick site.
"The independent planning and land authority is considering an Aldi request for a scoping territory plan variation to allow for a supermarket in Fyshwick. Any territory plan variation would require public consultation," he said.
Aldi had also written to Mr Gentleman recently about plans to expand the number of stores in Canberra. In response, Mr Gentleman said the territory government would assist Aldi "where possible" in finding sites.
The Planning Minister said sites that could be appropriate were planned for release in Moncrieff, Taylor, Whitlam, Mawson and Wanniassa.
"We will continue working with businesses like Aldi to ensure private sector support for our economic recovery," Mr Gentleman's spokesman said.
In a written statement to The Canberra Times, an Aldi spokeswoman said the company was in the early stages of the planning process for a store in the Fyshwick area.
"We are eager to bring our unique shopping experience to the Canberra Avenue (Fyshwick) community," she said.
"At this stage, we have successfully completed a community consultation process earlier this year.
"Like any responsible development, this has required Aldi to be in regular communication with many ACT stakeholders, including government and planning officials."
The proposal for the Fyshwick store drew the ire of some at the Fyshwick Markets.
During consultation earlier this year, Aldi said the supermarket would complement the markets.
But a number of stallholders and the owners of the markets rejected this claim. Fyshwick Markets co-owner Jack Irvine told The Canberra Times in March there would be no benefits to having a supermarket.
"We have got five supermarkets in a five-kilometre radius and obviously what [Aldi] sees is the economic benefit for them is to piggyback on the back of Fyshwick Markets," he said.