UPDATE 1-EU acts against Italy over helicopter contracts

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BRUSSELS, Oct 16 (Reuters) - European Union regulators have started legal proceedings against Italy over its contracts for buying helicopters, the European Commission said on Thursday.

"First, the contracts directly awarded in the framework of the illegal practice are still in force," the Commission said.

"Second, despite the commitment of the Italian authorities to tender the supply contracts ... a new supply contract may be directly awarded to Agusta," it said in a statement.

In April, the EU's highest court ruled that Italy broke EU law by buying helicopters only from Italian company Agusta, without any competitive tendering, to meet the requirements of several military and civilian corps.

In that lawsuit, Rome cited national security grounds for not holding public tenders for the helicopters that are used in forestry and civil protection as well as policing.

Agusta is part of the state-controlled Finmeccanica (SIFI.MI) group.

"The Commission considers that the Italian authorities have not taken the measures needed to comply with the court judgement, which obliges them to put an end to the illegal practice," the statement from the EU executive said.

The Italian authorities had also not given sufficient information on future purchases of helicopters that were envisaged in the long term, it added.

Thursday's decision involves the Commission, the EU executive, sending a "letter of formal notice" to Italy that requests more information on the case.

Then, if the Commission is not satisfied with the response, it can send a "reasoned opinion", or a final warning, setting out why it thinks there has been a breach of EU law.

Unless Italy complies with the reasoned opinion by a deadline, typically two months, the Commission may bring the case before the European Court of Justice (ECJ), the top court in the EU. It can take two years to bring a case.

The EU executive is seeking to bring down barriers to cross-border business throughout the bloc and wants to enforce European public procurement rules. (Reporting by Jeremy Smith; Editing by Dale Hudson)