CANBERRA (Reuters) - The Australian government on Wednesday introduced a bill into parliament that would impose potentially billion-dollar fines on big supermarket chains that fail to comply with an industry code of conduct ensuring they do not mistreat suppliers.

The legislation follows accusations from politicians and farmers that the biggest supermarket chains are using their scale to stifle competition, mistreat suppliers and overcharge customers, charges the companies reject.

Large grocers including market leaders Woolworths and Coles along with Germany's ALDI and wholesaler Metcash ( MCSHF ) will be made, from April next year, to comply with a code of conduct that has until now been voluntary.

The legislation would impose fines of up to 10% of annual turnover for breaches of the code, which mainly covers dealings with suppliers.

Woolworths reported Australian food sales of A$48 billion ($31 billion) in 2023, while Coles had A$37 billion and Metcash A$10 billion. ALDI does not disclose its earnings.

"We're cracking down on supermarket misconduct because it will help shoppers at the register, and it will help farmers and suppliers at the negotiating table," Assistant Treasury Minister Andrew Leigh said in a statement.

High inflation has eroded the approval rating of the centre-left Labor government ahead of an election due early next year.

Australia's supermarket sector is one of the most concentrated in the world, commentators say. Woolworths and Coles together sell two-thirds of all groceries.

Calls to break up big chains were rejected in a government-commissioned report earlier this year.

Coles, Metcash ( MCSHF ) and ALDI said they supported the mandatory code of conduct. Woolworths referred a request for comment to the Australian Retailers Association (ARA), which said it also supported the code.

"Positive supplier relations are a key priority for our members, as is value for money for consumers," said the ARA's chief industry affairs officer, Fleur Brown, in a statement to Reuters.

However, the association has raised concerns that the code has gone beyond the recommendations of the government-commissioned report, "particularly in areas concerning individual penalties and retribution provisions", she said.

($1 = 1.5427 Australian dollars)