Joaquin Almunia, the European Union's monetary affairs commissioner, started proceedings against Italy by producing a report -- adopted Tuesday by the commission -- that underscores how Italy had broken the pact's deficit ceiling in 2003 and 2004.
Almunia also predicted "excessive deficits" for 2005 and 2006 and said Italy's public debt at 106 percent of gross domestic product was far above the EU's 60 percent target.
In March the EU's stability pact was made more "flexible" in a move strongly criticized by the European Central Bank.
The change, made to accommodate France, lets countries to escape action under the pact if their breach of the 3 percent ceiling is "small and temporary" and if they have sound underlying finances.
Treasury officials of EU member states will review Almunia's report. If they endorse it, it will be referred to finance ministers, possibly in July.
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