The European Union (UE) has begun investigating accusations that Argentina and Indonesia are dumping biodiesel in Europe, undercutting local companies which face falling output and bankruptcies.

The European Commission said there was enough initial evidence to show import prices were damaging the industry’s viability as Indonesia and Argentina, the world’s no. 1 biodiesel exporter, increase their imports and market share, reported Reuters.

“It is alleged that the producers ... have benefited from subsidies granted by the governments of Argentina and Indonesia,” the Commission said in its Official Journal.

The investigation is the latest EU measure to protect its renewables industry, putting Europe at odds with major trading partners at a time when trade is one of the few sources of economic growth for the region struggling with a debt crisis.

Argentina is already challenging Spanish barriers to its biodiesel imports at the World Trade Organisation, after Madrid suspected dumping – deliberately selling products for less abroad than at home or at less than cost.

The European Biodiesel Board, which filed the complaint with the Commission, says Europe has seen a surge in Argentine and Indonesian imports, leading to several bankruptcies, forcing European producers to sell below cost and to cut production.

Imports from the two countries progressively rose from very low levels in 2008 to a total of around 2.5 million tonnes in 2011, or more than 90% of imports into the EU, according to EU statistics office Eurostat and the biodiesel board.