The European Commission's decision to send France a warning letter follows the failure of a parliamentary committee in Paris last week to reach a compromise which would have ended the monopoly enjoyed by the state utility Electricite de France.
Anger has been mounting at France's failure to implement an European Union law which opens part of the European electricity market to competition. Britain and Germany have complained that EdF is allowed to buy companies on their markets while UK and German firms are locked out of France.
The Spanish government has threatened to block French companies from its power market as long as France refused to open up to foreign competition. The Netherlands and Italy have indicated they may halt electricity imports from France.
Luxembourg was yesterday also served with the warning letter, known as a mise en demeure, over the same issue and Brussels said that the issue is so serious that both countries will have just two weeks to respond. Normally member states have two months to explain their position.
If it is not satisfied with what it hears, the Commission will proceed with a "reasoned opinion", the penultimate step before action begins in the European Court of Justice.
A spokesman for the Energy Commissioner, Loyola de Palacio, said: "The Commission has decided to start infringement proceedings against France and Luxembourg for failing to transpose the electricity directive into national law." The EU electricity law, which was supposed to enter into force in February, requires member states to allow major users, making up at least 25 per cent of electricity consumption, to choose suppliers.