The European Commission has today started legal action against the Government over its failure to protect the privacy of British internet users.

The case was sparked by BT’s covert use of the controversial user-tracking technology Phorm on customers using its internet service in 2006 and 2007.

Phorm, a UK-based company founded in 2004, monitors users’ favourite sites and searches, and uses the information to deliver individually targeted advertising.

One of its most outspoken opponents is Sir Tim Berners-Lee, generally credited with inventing the web.

The European Commission has been concerned about the way Phorm was secretly tested in the United Kingdom. Last year, the Government backed Phorm after a complaint by Brussels.

But today Viviane Reding, the European Union's Commissioner for Information Society and Media, announced the first stage of legal action, saying that the Government had failed to implement European laws that protect internet users.

"Technologies such as internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules,” the Commissioner said. “These rules are there to protect the privacy of citizens and must be rigorously enforced by all member states.”

BT has already admitted that it conducted trials of Phorm without users’ consent in 2006 and 2007. A further, invitation-only, trial was conducted last year.

Ms Reding’s statement continued: “I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered and have proper sanctions at their disposal to enforce EU legislation on the confidentiality of communications.”

Ms Reding’s contention is that UK laws must be tightened to protect consumers and comply with the ePrivacy Directive, which the UK Government signed up to in 2002. It came into force at the end of October 2003.

After receiving "hundreds of complaints" from UK citizens over the Phorm trials, EC officials wrote to Whitehall asking whether UK law adequately protected personal data.

"Following an analysis of the answers received, the commission has concerns that there are structural problems in the way the UK has implemented EU rules ensuring the confidentiality of communications,” the Commission said.

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