Despite the objections of German chancellor Angela Merkel and the Chinese Ministry of Commerce, the European Commission have begun their investigation into alleged Chinese solar panel dumping practices.

A decision is not likely to be published on the matter until the end of 2013.

The move comes in response to a 24 July complaint filed by the European Pro Sun coalition, a group of 25 European solar panel manufacturers headed by the German-based SolarWorld, who claim China is selling solar panels below market value.

Angela Merkel and Wen Jiabao

Berlin is keen to see an amicable result to the matter, with German investment in Chinese companies currently totaling $33bn, while China have over $1.5bn invested in German firms.

Unsurprisingly Merkel was urging negotiation and talks, but European manufacturers and EU Trade Commissioner Karel De Gucht have decided to take a hardline.

Earlier this month China Daily newspaper said Beijing would retaliate with trade curbs if Brussels went ahead with the investigation. China has reportedly been lobbying hard in Brussels against the probe.

In a statement, the Commission outlined how it will conduct an investigation through a series of questionnaires sent out to various interested parties regarding exports, production, sales, and imports of solar panels and their key components.

The information will then be verified by the Commission, reports the International Centre for Trade and Sustainable Development online website.

The panel is expected to release its provisional findings by June 2013. Based on the evidence, the Commission will then decide whether to impose provisional anti-dumping duties, continue the investigation without imposing provisional duties, or terminate the investigation.

A key factor in the investigation is what is known as the “Union interest test.” In essence, despite the outcome of the investigation, the EC will have to decide whether imposition of anti-dumping duties will be overall more costly to the European Union economy than what the benefit would be to the Pro Sun coalition.

A definitive decision on the imposition of retaliatory measures is expected to be published in the Official Journal of the European Union by 5 December 2013.

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