MEETING angry shareholders is an experience few company bosses savour. Yet on June 26th Dave Lewis, the new chief executive of Tesco, Britain’s largest supermarket chain, will have to do exactly that. The firm will hold its first annual meeting since revealing that it had inflated its profits by £263m ($421m) through wrongly booking rebates from suppliers—prompting his predecessor’s departure. Since then little has gone right for Tesco: sales have continued to slide, and the falling value of its property has forced it to declare a pre-tax loss of £6.4 billion for the year to February. Worse still, a Serious Fraud Office inquiry has been opened into the accounting scandal, which could cost the firm more than the error itself.

Some have asked whether Tesco’s 32-year relationship with its former auditor, PwC, was among the root causes of the crisis. The Financial Reporting Council (FRC) has launched an inquiry into PwC’s audits of Tesco, and last month Tesco replaced PwC with another auditing firm. But the large and undisclosed rebates that Tesco, like many other grocery chains, gets from its suppliers represent another close, long-term relationship whose role in the scandal merits examination.

These payments mainly come in two forms. The first type, called slotting fees, are in return for giving the supplier’s products a prominent place on the retailer’s shelves, or indeed any space at all. The second type, called marketing or distribution fees, are suppliers’ reward to retailers when they boost sales of their products by running promotional offers on them.

Such fees have been around since the 1970s. But big grocery chains began to demand much larger rebates in the recession that followed the financial crisis. Analysts reckon that American retailers may now rake in $18 billion or more in rebates each year, up from $1 billion in the 1990s. In Britain, by some estimates the big four supermarkets receive more in payments from their suppliers than they make in operating profits. In Australia, growing supplier rebates have boosted food retailers’ profit margins by an average of 2.5 percentage points, to 5.7%, over the past five years, according to a report last month by UBS, a bank. So lucrative have slotting fees become that industry insiders joke that supermarket shelves are now the world’s most expensive property.

As competition from deep-discount supermarkets such as Aldi and Lidl—which mostly sell cheap, own-label products—has put pressure on mainstream grocers like Tesco, they have reacted by squeezing higher fees out of their suppliers. Although the makers of branded food and household supplies may complain about having to pay, the prominent placing they get in return helps them to fend off competition from cheaper rivals. As a recent study from the German Institute for Economic Research has shown, raising slotting fees increases barriers to entry for new and potentially disruptive competitors. Promotional fees also help suppliers of branded goods by discouraging grocers from promoting their own-label products instead. Ultimately, shoppers lose out, since cheaper products are harder to find.

Some countries have tried to protect consumers by making rebates illegal. Poland banned them in 1993 as part of free-market reforms that followed the end of communism. And in 1995 America banned them on alcoholic drinks, though its main worry was that prominent displays of booze promoted irresponsible drinking. However, progress towards eliminating them on all products in America stalled after the Federal Trade Commission (FTC) concluded in 2001 that more research on them was needed before it could take any further action.

The recent big rise in rebates has put them back in regulators’ sights, though little action has been taken so far. China’s government launched a crackdown in 2011 on retailers demanding excessively large fees from suppliers. But last October, when America’s FTC revised its guidelines on rebates, it did little other than require suppliers to offer comparable payments to all retailers. Britain’s FRC said last month that it would take a close look at how retailers were accounting for rebates, though there have been no moves to curb them.

It seems, however, that consumers are taking more vigorous action than regulators. Though they may be unaware of why mainstream supermarkets seem so full of pricey branded products, they are voting with their feet and heading to the deep discounters. This week Grant O’Brien resigned as boss of Woolworths, Australia’s largest supermarket chain. The retailer has issued two profit warnings so far this year, as customers switch to Aldi.

Tesco says it will reduce the 24 types of rebates it seeks from suppliers to just three by 2017. But payments for prominent shelf positioning will stay. Some analysts think it should scrap them altogether. It is noticeable that Walmart, which does not use slotting fees (though it does receive other rebates) and has stuck to a low-price model, is suffering much less of a consumer backlash in America than Tesco is in Britain.