* Watchdog says Woolworths sought $44 mln from suppliers
* Says request convened consumer law
* Seeking refunds via proceedings set for Feb. 1
* Woolworths denies wrongdoing (Adds comments from competition agency, Woolworths, context)
SYDNEY, Dec 10 (Reuters) - Australia's competition regulator on Thursday said it has launched court proceedings against Woolworths Ltd WOW.AX , saying a request for funds from suppliers by the country's biggest supermarket chain amounted to "unconscionable conduct".
The Australian Competition and Consumer Commission (ACCC) said Woolworths sought about A$60.2 million ($43.84 million) in "payments" from suppliers to help narrow a shortfall in earnings, under a scheme the supermarket called Mind the Gap.
The agency said the scheme was approved by senior management, involved 821 suppliers, and was in contravention of consumer law. It said it was seeking an injunction requiring Woolworths refund suppliers and pay related costs.
Woolworths denied any wrongdoing.
"Not agreeing to a payment would be seen as not supporting Woolworths," the ACCC said in a statement.
The ACCC's latest move is part of a broader probe into major chains' treatment of supermarket suppliers. In October, Woolworths, Aldi Inc and Wesfarmers Ltd's WES.AX Coles signed up to a code of conduct for the food industry, implemented after the ACCC began its probe in 2013.
The ACCC's case against Woolworths culminates a torrid year for the chain which has been battling a step-up in competition brought about by new entrants such as Aldi. Woolworths in 2015 downgraded its profit forecast three times and lost its chief executive, chairman and a string of other senior executives.
In a statement, Woolworths said it had cooperated with the ACCC during the investigation over the last year and was reviewing the claims.
"We believe our conduct was consistent with Australian and international industry practice to engage regularly with suppliers over product and category performance," Woolworths said.
The ACCC said Woolworths managers contacted a large number of "tier B" suppliers and asked for Mind the Gap payments of A$4,291 to A$1.4 million. It said the scheme aimed to reduce a projected shortfall in half-year profit by Dec. 31, 2014.
Woolworths sought about A$60.2 million and received around A$18.1 million, the ACCC said.
"Woolworths' conduct in requesting Mind the Gap payments was unconscionable in all the circumstances," the ACCC said.
Proceedings are set to be heard on Feb. 1 in the Australian Federal Court in Sydney. ($1 = 1.3732 Australian dollars)