The European Commission said on Thursday it launched an investigation into suspected dumping of solar panels by Chinese producers, a move that could trigger a trade war between the European Union and China.
The investigation into one of the biggest import sectors ever targeted stems from a complaint by a group of European solar companies, led by Germany's SolarWorld .
The group, comprising of members in Germany, Italy, Spain and other EU countries, says Chinese solar firms have been selling panels below market value in Europe.
China's solar firms warned in July of a trade war, calling on Beijing to strike back against the impending investigation by the European Union. Chinese producers include Yingli Green Energy , Suntech Power Holdings Co Ltd , Trina Solar Ltd and Canadian Solar Inc .
China sold about 16.64 billion pounds in solar panels and components to the European Union in 2011 -- some 60 percent of all Chinese exports of the product.
The European Union imported goods from China worth a total of 292 billion euros ($368.01 billion) last year. Imports of Chinese products subject to trade defence duties total less than one percent of that amount.
The United States imposed duties on solar panel imports from China in May after a similar initiative led by SolarWorld there.
The European Commission will examine whether dumping is taking place, whether it is damaging EU industry and whether duties would harm the EU's economic interests.
Western solar firms have been at odds with their Chinese counterparts for years, alleging that they receive lavish credit lines to offer modules at cheaper pricing.
German solar company Q-Cells became the most prominent EU victim of an increasingly competitive market, filing for insolvency in April.
However, some European solar companies such as those that install panels say Europe should welcome Chinese imports because they make solar power more affordable and are essential for the 27-member bloc to achieve its goal of having 20 percent of energy from renewables by 2020.
The Commission will send questionnaires to the Chinese exporters as well as to EU producers and importers and make a recommendation to EU members. They have within 15 months of the opening of the investigation to impose any duties, which are generally in place five years.
(Reporting by Philip Blenkinsop in Brussels; Editing by Maju Samuel)