Officials from the office of the Director of Consumer Affairs visited the home in Co Wicklow of a former Superquinn egg supplier, Mr Tom Dolan, yesterday to examine documents he has relating to his business relationship with the supermarket chain.

The investigation into "hello money" allegations follows the admission by the group's major shareholder, Mr Feargal Quinn, that "support money" is sought from suppliers when new stores are being opened.

Mr Dolan, a former employee of Corby Rock Eggs, resigned last week following a request for £40,000 for the new Dundalk store, due to open this morning. He told The Irish Times yesterday that he had believed the close business relationship between Corby Rock Eggs and Superquinn would have precluded requests for such payments

Mr Quinn said his company's relationship with a supplier would be affected if that supplier failed to make "support money" donations and if the product was easily replaceable.

He stressed that all such donations were passed on to the consumer in terms of cheaper prices, a necessary part of the strategy to attract new custom. Although Tesco has stated that it does not operate such an arrangement with its suppliers, Mr Quinn said the British multiples were "known to be putting the squeeze on their suppliers".

Mr Dolan said when he began his business, Drumbawn Farm Free Range Eggs, in 1986, he concentrated on supplying Superquinn because of its upmarket niche and its reputation as an ethical supermarket. "I bought into the dream, as it were, that there could be a sustainable business," he said. He sold his business to Corby Rock Eggs two years ago amid a scenario of declining margins and took on a consultancy role with that company, a position from which he resigned last Thursday.

For a supplier, the best relationship with Superquinn was when there was no agreement, he said. With a Long-Term Agreement (LTA), rebates were payable which went up from 3.6 per cent to 5 per cent of annual sales as turnover increased.

He said the company was encouraged to become a "partner supplier", opening its books to the superstore to show the cost structure. Last September, there was a champagne celebration of the new relationship and he was told there would be no more discount payments, no more LTAs, no more "hello money", and no more "goodbye money".

He marked the occasion in his diary, writing "New Egg Regime" in large letters. Last Wednesday Corby Rock was asked to make a £40,000 donation to the Dundalk store in staggered payments.

Mr Dolan said he resigned from the company because he was in an impossible position, encouraging farmers to produce more eggs when he did not know what the profit margin was.