Proceedings have been launched against the UK following last year's trial of Phorm.
The behavioural advertising technology which monitors broadband habits to establish the types of adverts users may respond to was tested secretly by BT in 2008.
EU Telecoms Commissioner Viviane Reding announced that after several complaints about the technology and the UK response to the trial, infringement proceedings will be launched.
She said that all Europeans have a right to privacy and that countries have a responsibility to uphold this right and to ensure EU legislation is enforced.
"We have been following the Phorm case for some time and have concluded that there are problems in the way the UK has implemented parts of EU rules on the confidentiality of communications," Commissioner Reding commented.
She also called on the UK government to amend existing national laws "to enforce EU legislation on the confidentiality of communications" suggesting that this would protect personal data and "help reassure UK consumers about their privacy and data protection while surfing the internet".
The UK now has two months to respond to the first stage of the proceedings.