The complaint, lodged with the office of the Tasmanian Economic Regulator last week by gym owners, claims that the Launceston City Council is not following competition rules.

Rival gym owners say the gym, which is set to open at Launceston Aquatic on January 13 under the name LAFit, will be unfairly subsidised.

The complaint, seen by The Examiner, states: "Launceston Aquatic Health and Fitness (LAFit) is supplying a service with fancy new gear in a premium facility and does not charge a price reflective of that type of investment and amenity because they have not applied full cost attribution to their business plan".

The complaint lists about 30 costs to the gym business - ranging from waste collection to interest payments - that are not included in the council's LAFit business plan - estimated to total $400,000.

This would more than double the gym's establishment and yearly operating costs.

The complaint also states that the council is aiming for an unrealistically high average yield from gym members, gym staff members are being paid well above market rates, and that the council apparently did not understand competitive neutrality guidelines.

Council general manager Robert Dobrzynski said the majority of council-owned aquatic centres had gyms, which offset the centre's cost to ratepayers.

Mr Dobrzynski said the council was confident the gym was compliant.

"The council would participate fully and openly in assisting the regulator with any review process," he said.