The European Commission has opened a formal investigation into payments and grants awarded to Bus Éireann and Dublin Bus following a complaint by a representative body of private bus operators.
The investigation will specifically look into whether annual compensation payments - which include the financing of replacement buses and the expansion of the bus fleet - for urban, suburban and regional transport services are in line with EU state aid rules.
It will also examine whether investment and training subsidies granted to Bus Éireann and Dublin Bus meet with EU legislation.
There are concerns that grants awarded to the two companies may not be in keeping with common market rules as upgrades of bus stations, garages and maintenance facilities which are partially funded by the state are not available on an equal basis to all bus operators.
The European Commission says it has not yet received information necessary to its investigation from the Government and is now seeking a submission containing information on the modalities, duration, budget, intensity and further conditions of training subsidies offered to the two State companies.