European commission says UK does not comply with EU law, after failing to investigate BT's trials of Phorm software

The European commission is taking the UK government to court for breaching European Union laws on internet privacy.

The court action follows complaints made by broadband users to the UK Information Commissioner relating to the secret use of Phorm activity-tracking software monitoring users' online habits, an experiment BT dropped in 2009 after tests in 2006 and 2007.

But BT has now said that it is "simply inaccurate" to link the court action to the company. The telecoms operator hit back at reports linking the commission's investigation to the company's experiment tracking the online habits of customers in order to target them with relevant advertising.

"The potential infraction proceedings relate to an alleged mis-implementation of EU law by the UK government. As such, they are a matter for the EU and the UK government. It is simply inaccurate to describe them as relating in any way to BT," the company said.

The European commission twice wrote to the UK government in 2009 asking it to change privacy laws under the Regulation of Investigator Powers Act (RIPA) and the Data Protection Act (DPA). The commission has now said it will use court action to force the UK government to more fully implement the Privacy and Electronic Communications Directive and the Data Protection Directive.

The commission yesterday said: "The commission considers that existing UK law governing the confidentiality of electronic communications is in breach of the UK's obligations under the ePrivacy Directive and the Data Protection Directive."

BT, the UK's largest broadband provider, attracted controversy for testing technology developed by Phorm that tracked the habits of customers in order to increase the relevancy of advertising it serves. It subsequently dropped the idea after a backlash from users and privacy watchdogs.

European ePrivacy and Data Protection directives require the establishment of a regulator based in the country to make sure the interception of users' communication is within the boundaries of the law, which the UK does not currently have. The UK Information Commissioner has also spoken of the need for such a body.

The commission said the UK government is not strict enough in the way it prohibits the interception of a person's communication. "Current UK law authorises interception of communications not only where the persons concerned have consented to interception but also when the person intercepting the communications has 'reasonable grounds for believing' that consent to do so has been given. These UK provisions do not comply with EU rules defining consent as 'freely given, specific and informed indication of a person's wishes'," it added.

UK law should align itself with EU directives ordering penalties to be imposed for any unlawful interception of communication, the commission said, rather than limiting sanctions to "intentional" interception, as the law currently states.

Daniel Hamilton, campaign director at privacy lobby group Big Brother Watch, told the Guardian: "For companies like BT to monitor the internet access habits of their customers in order to sell targeted advertising is simply unacceptable.

"While it's humiliating that it has taken the threat of European court of justice action to highlight the deficiencies in the UK's privacy laws, BT should not seek to pass the buck and blame the government for its policy of snooping on its own customers. BT must take concrete steps to ensure such intrusions into personal privacy are not repeated in future."