HOWZAT

Although UK law makes it an offence to unlawfully intercept communications, the scope of this offence is limited to "intentional" interception only.

"Moreover, according to this law, interception is also considered to be lawful when the interceptor has 'reasonable grounds for believing' that consent to interception has been given.”

City of London police refused last year to act over BT and Phorm's trials, insisting that BT’s customers had given their "implied consent" and that the companies had a lack of criminal intent.

The British Government “should have fined these companies,” an EC spokesman said today.

The Commission has now given the Government two months to respond to today’s “infringement proceeding” - the first stage of a legal process which could end up in the European Court of Justice for an alleged breach of the directive.

The directive states that user consent must be “freely given, specific, and informed”, and it requires EU member states to impose sanctions in the event of breaches of the rules.

The Department of Business, Enterprise and Regulatory Reform, which along with the Home Office received the Commission’s infringement notice today, said it would respond within the two-month time frame.

If no satisfactory reply is received by the Commission within two months, it may decide to issue a “reasoned opinion”, the next stage of the infringement process.

Brussels is also concerned that the UK has no regulatory body charged with controlling interceptions of communications by private companies. The UK’s Information Commissioner does not any power to enforce the Regulation of Investigatory Powers Act (RIPA), which governs interception, and the Office of the Surveillance Commissioners is mandated only to investigate interceptions by public authorities.

Ms Reding reinforced her stern message to the British Government in her weekly video message, delivered via the European Commission’s website.

“Privacy is a particular value for us Europeans; a value reflected in European laws for many years,” she said.

“However, in spite of the many advantages of technological development, there is an undeniable risk that privacy is being lost to the brave new world of intrusive technologies. On the global information highways, personal information is increasingly becoming ‘the new currency’. And I believe that Europeans… must have the right to control how their personal information is used.”

“European privacy rules are crystal clear,” she said. “A person's information can only be used with their prior consent. We cannot give up this basic principle, and have all our exchanges monitored, surveyed and stored, in exchange for a promise of ‘more relevant’ advertisements! I will not shy away from taking action where an EU country falls short of this duty.”

Phorm has already been investigated by the police and the Government over privacy concerns. It has attracted interest from UK internet service providers including BT, Virgin Media and TalkTalk, although no company has yet fully introduced the system.

Sir Tim spoke out passionately against Phorm at a meeting in the House of Commons in March this year. "It is very important that when we click, we click without a thought that a third party knows what we're clicking on," he said. "'What is at stake is the integrity of the internet as a communications medium. It's important there should be no snooping on the internet."

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