The short answer is yes they can do. We know that Google uses proximity (alongside relevance and prominence) to influence which business listings to rank.

The chart above shows the position a business is listed in a Local Pack within a 10-mile radius for one keyword.
Positions 1-3 mean they’re in the Local Pack for that location, 4 or higher means they’re in the Local Finder (that’s what you see when you click on More Places below the three businesses listed).
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