The European Union is acting on allegations that the United States and allies like Britain used Cold War satellites to spy on European industry.

The two countries deny the charges.

The European Parliament voted Wednesday in favour of forming a committee to investigate whether the Echelon spy system has been used to steal trade secrets and undercut bargaining positions.

The investigation is in response to a report written by Duncan Campbell, a Scottish physicist and researcher who has devoted 20 years to studying electronic espionage. The report claims the spy system was to blame for several major contracts going to the U.S. rather than European firms.

The EU will have one year to establish whether the spy system really exists and to what extent industry in Europe has been damaged by economic espionage. The EU will also examine how individuals can be protected from spying.

The committee expects to complete its findings in about eight months.

Echelon is a system of satellites and listening posts used by Britain, Canada, Australia and New Zealand and the United States to keep an eye on the U.S.S.R. during the Cold War. Its system of electronic-intercept stations and space satellites has the ability to listen in on all satellite, microwave, cellular and fibre-optic communications.