The Commission said it had given Germany enough time to enshrine EU laws on data storage in its own legislation, but that Berlin had failed to do so.
Reuters reported on Tuesday that the Commission would take Germany to court.
The case follows a European Commission directive in 2006, aiming to help authorities track down suspected perpetrators of serious crime. It ordered the 27 member states to introduce laws obliging telecoms companies to store records of people's emails and phone calls, including those made via the Internet.
The German government tried to introduce such legislation, but its top court rejected it in March 2010, saying it meant a particularly deep intrusion into telecommunications privacy.
"Germany has been given a considerable amount of time to transpose the directive into national law," the Commission said in a statement.
"Yet, even though none of the conclusions of the courts' judgment preclude full transposition of the directive in a way that complies with the national constitution, no new legislation has been adopted since," it said.
The Commission asked the Luxembourg-based European Court of Justice to fine Germany 315,037 euros per day.
Telecoms and Internet providers typically store consumer data for a limited period of time, either for quality control or accounting.
(Reporting by Claire Davenport and Francesco Guarascio, writing by Rex Merrifield; Editing by Helen Massy-Beresford)
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