The European Commission on Wednesday launched two investigations into whether heavy state subsidies allowed Chinese solar companies to submit unfairly low bids for the construction of a Romanian solar farm.

The probes come under the Foreign Subsidies Regulation (FSR), new legislation signed into law last year that allows the EU to investigate potential foul play from international companies bidding in public tenders larger than €250m within the bloc.

The probes are targeting two Chinese solar companies that bid in the auction, concluded last month, for the design, construction and operation of the planned 110MW solar park.

The first company under investigation is a consortium comprising Romania’s ENEVO Group and newly established LONGi Solar Technologie, which is listed on the Hong Kong stock exchange, the Commission said in a press statement.

The second investigated consortium is composed of Shanghai Electric UK and Shanghai Electric Hong Kong International Engineering, both of which are wholly owned by the Chinese Government.

Thierry Breton, EU Commissioner for Internal Market, said: “The two new in-depth investigations on foreign subsidies in the solar panel sector aim to preserve Europe’s economic security and competitiveness by ensuring that companies in our Single Market are truly competitive and play fair.”

The EU’s domestic solar market has been decimated over the past decade by an influx of cheap, heavily subsidised Chinese solar panels. At the final State of the Union address of her first term as President of the European Commission, Ursula von der Leyen condemned Chinese dominance within the global clean energy space, touching on the solar panel crisis and electric vehicle sales.

She said: “We have not forgotten how China’s unfair trade practices affected our solar industry,” adding that many businesses have been “pushed out by heavily subsidised Chinese competitors”, with some forced to declare bankruptcy.

Manfred Weber, leader of the European People’s Party, told reporters after the address that the EU does not want to see Chinese companies benefitting from the bloc’s climate policies. “We have to activate our trade defence instruments to avoid another solar panel attack,” he said.

In a letter written in February, European solar manufacturers warned von der Leyen and the Commission that they will face bankruptcy under current market conditions, calling on the bloc to implement “emergency measures” to keep the industry afloat.

The European Solar Manufacturing Council, which represents around 80 solar photovoltaics (PV) companies, said the main issue for domestic producers comes from the crisis caused by “aggressive” Chinese subsidies. It estimates there is a severe oversupply of approximately 140–170 million PV modules in European ports and warehouses, equivalent to 70–85GW of electric capacity.

The Commission said that the FSR will address distortions in the market caused by foreign subsidies and will close regulatory gaps.