Bags of Taqueria tortilla chips sit at eye level. Brightly packaged boxes of Gerber baby food and Atkins low-carbohydrate cake mixes are placed neatly on a shelf just below in an attractive, end-of-aisle, new-products display at the local store.

Many of the products in this display have been rolled out nationally in recent weeks, their easily identifiable packages found in similar spots in almost any supermarket across the country.

Is it just coincidence that such products appear so well-placed in the majority of the nation’s 33,000 grocery stores?

Hardly.

Food industry giants, such as Northfield, Ill.-based Kraft Foods Inc., Chicago’s Sara Lee Corp. and cereal-makers Kellogg Co. and General Mills pay hundreds of millions of dollars each year to secure the best slots for many of their new products.

A national rollout of a new snack, bread or refrigerated pasta meal can cost as much as $2 million per item, according to the U.S. Federal Trade Commission, which recently completed the first major study of the growing, controversial industry practice.

The FTC estimates that, as thousands of new products launch annually, more than $9 billion changes hands in “slotting fees,” the term for payments by foodmakers to retailers for the right to place their products in the best, most customer-friendly spots on shelves.

Even though a typical store can stock several thousand products, critics say that slotting fees inflate prices and limit competition and consumer food choices.

“Slotting fees are just another form of payola, commercial bribery,” said Nicholas Pyle, president of the Independent Bakers Association, who is fighting the fees on behalf of the group’s small bakery members.

Few consumers know about the fees, which help place brand-name goods in just the right spot to be noticed, yet the income they generate can account for as much as half the revenues of a regional supermarket chain.

Exactly how slotting deals are struck also remains a closely guarded secret, but stories of cash payments and favorable treatment abound.

Even those responsible for placing the goods on display don’t know how deals are arranged and why certain products always seem to end up in the best spots.

“Those kind of decisions are made at a corporate level,” said Annette Jones, assistant store manager for Jewel’s supermarket at the corner of State and Ohio Streets in downtown Chicago. “We don’t have anything to do with that at store level. I know companies pay fees, but we don’t know how much.”

The controversy over such fees has raged for years, mostly in the courts where leading companies like Frito-Lay, Kellogg Co., Unilever and Dr. Pepper/Seven-Up Inc. have been sued. But plaintiffs, as well as various government agencies that have looked into the practice, have all found it tough to prove that big business is using its marketing programs to keep smaller competitors off shelves.

The U.S. General Accounting Office tried to probe the sector several years ago but came up empty-handed.

The industry refused to cooperate, saying the data were proprietary and confidential.

And when some key witnesses were called before the U.S. Senate Small Business Committee in September 1999 to discuss the growing challenges faced by small food manufacturers, they would only give evidence if their voices were altered, appearance concealed and identity kept secret.

Giant foodmakers pay a range of incentives aimed at getting retailers to push more product; slotting fees are one of the more controversial practices.

“Slotting fees are part of promotional allowances that probably run about $50 billion per year in payments from food manufacturers to food retailers,” David Nelson, a food producers analyst with Credit Suisse First Boston, estimated in a recent note to clients on the subject. “We estimate promotional fees to be roughly comparable to earnings before interest and tax.”

The FTC, responsible for combating anti-competitive practices, has always maintained that there is no evidence that the fees harm consumers. Investigators need aggrieved parties to come forward with more solid complaints to take the issue further, said Patricia Schultheiss, an attorney handling the issue for the agency’s Bureau of Competition.

The FTC might not have long to wait.

“We will meet in early February to look at the possibility of another petition to the FTC,” said Pyle, in reference to a more detailed complaint from his members in the baking association. “My members are small and family-owned companies, which can not afford to pay these fees. It’s just a way of keeping people like us out of stores.”

Those close to the sector are not surprised at the difficulty encountered by regulators.

“I’m not surprised about the FTC’s latest effort It’s a complex issue and one not easily understood,” said Bill Bishop, founder of leading industry consultant Willard Bishop Consulting. “If those flows of money are not accounted for properly, that in turn is an SEC problem. It’s something many of us are waiting to see just how that shakes out.”