The admission comes a week after Trade Minister Mary Coughlan proposed a retail ombudsman and code of practice that would outlaw such charges, and after opposition party Fine Gael claimed suppliers were forced to pay 160m a year for product placement and promotion.
Superquinn, which has 23 stores and 7% of the 12bn Irish grocery market, confirmed it charged suppliers up to 1,200 a week for promotional space in fridges and freezers and 1,000 a week for special stand displays.
It claimed its competitors operated similar systems, with higher fees, and that it sent a 'rate card' to all suppliers at the start of the year, but they did not have to participate in offers to be listed.
The charges were legal and had been approved by the Competition Authority, it added.
However, an authority spokeswoman said it did not "give approvals". It had received an anonymous complaint but decided there were insufficient grounds for prosecution.