The Australian Competition and Consumer Commission and Woolworths are in the Federal Court this week over allegations the retailer engaged in unconscionable conduct after it demanded $60 million in extra payments from suppliers.

The Australian Competition and Consumer Commission alleges the supermarket demanded extra payments at short notice as part of its Mind the Gap program and any supplier unwilling to pay was seen as "not supporting" Woolworths.

The ACCC took the action last December against Woolworths, alleging the supermarket chain's Mind the Gap charges were designed to extract $60 million from suppliers in the lead up to Christmas 2014.

The commission alleges 821 so-called tier two suppliers were asked to pay between $4,291 to $1.4 million to "support" Woolworths.

The ACCC will argue the supermarket giant used its strong bargaining position and ultimately captured $18 million from these suppliers.

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Woolworths will tell the court that payments from suppliers were part of ordinary commercial arrangements.

The company's lawyers will argue that the company aimed to achieve $11 million in the Mind the Gap program.

Woolworths denies it participated in unconscionable conduct, arguing the Mind the Gap program was entirely legal and consistent with commercial practice at the time.

The case is expected to last five days.

It follows the ACCC's victory in 2015 over supermarket rival Coles.

Coles was found guilty of misusing its bargaining power and fined $10 million and ordered to pay back $12 million to affected suppliers.