Chinese networking company Huawei has denied accusations that it benefits from illegal state subsidies, and said it objects to the investigation that the European Commission is reportedly launching on the basis of these claims.

In a statement emailed to Techworld, Huawei said that it has not received any communication from the European Commission regarding an investigation, but is aware of media reports on the matter – most of which stem from the Financial Times.

The company said it applauds the European Commission’s position on fair and open competition and abides by such principles when competing in the market.

“Huawei is convinced that the globalisation of the telecommunications industry requires an open environment, where increased investment and smarter innovation will spur economic growth and benefit consumers in Europe and worldwide,” the company said.

“Huawei’s operations – from our innovation efforts to delivery of solutions – are rooted in Europe, and this is also Huawei’s long-term investment strategy in the region”.

The news follows reports that the European Commission is preparing to launch a major trade investigation into Chinese networking companies Huawei and ZTE, after it emerged that they may have benefited from illegal state subsidies.

The commission has been piecing together the case for months, according to reports, and a formal case could be brought as soon as next month.

EU officials reportedly told representatives from member states in a closed-door meeting last week that there is “very solid evidence” of illegal Chinese subsidies to the firms. They also accused Huawei and ZTE of selling products in the EU below cost – a practice known as “dumping”.

Update, 29/5/2012 - ZTE has alse responded to the news with the following statement:

“We are aware of the recent media report mention that the EU is preparing to start a trade case against ZTE and Huawei, however we have not been contacted by any authority about this.

“As a public company listed on both the Hong Kong and Shenzhen stock exchanges, ZTE is committed to transparent operations and being in full conformity with trading regulations of the WTO and local markets. Moreover, ZTE has been successful in global markets with its innovative design, quality service and its ability to customise products for clients at short notice.

“ZTE receives no illegal or hidden subsidies, nor does it dump products in any markets where it operates.”