Private operators have complained that the proposed incinerator is too big and will distort the market.
The monopolies division of the Competition Authority has now decided to investigate the operation.
Dublin City Council will be contractually obliged to supply 320,000 tonnes of waste to the plant.
The council's private partners Covanta say there is enough waste around Dublin to meet the waste target.
The company said it can also accept waste from other nearby regions to operate to a full capacity of 600,000 tonnes a year.
Covanta does not believe the council would have to pay penalties for not supplying enough waste.
The council has said it will respond to the complaint but that works to build the facility will continue as construction on the site started in December.
Environment Minister John Gormley, who represents local residents in the Dáil, is opposed to the facility and also wants the contract investigated.
The news of the investigation comes on the day that the Dublin authorities have asked for expressions of interest from operators on how to dispose up to 350,000 tonnes of waste a year.
With council landfills running out of space, they may have to pay tens of millions of euro a year while Poolbeg is unavailable.
