The European Union executive has given Hungary two weeks to show its new media law complies with EU rules or face legal action, a European Commission spokesman said on Friday.
"I confirm Hungary has two weeks to respond, then we reserve the right to launch infringement proceedings," Jonathan Todd told Reuters.
He said EU telecoms chief Neelie Kroes had sent a letter to Budapest on Friday, demanding a response within two weeks clarifying EU concerns over the law.
Hungary, which holds the EU's rotating presidency, drew criticism from Germany, Britain and France over concerns about restrictions on media freedom in its new media law.
Critics say the law, which gives wide powers to a regulator to impose fines on media outlets if their reports are not deemed balanced, is too heavy handed and concentrates power over the press in the hands of the ruling party's allies.