The European Commission has warned car makers they face prosecution if they are found to be in breach of competition rules over prices.

The comments come as new figures show car buyers in the UK are paying up to 60% more for their vehicles than in other European countries.

The price of cars in the UK is currently the subject of a report by the Competition Commission. The government is looking at the findings and will give its verdict in a few weeks' time.

But the price differentials are a problem throughout Europe.

Car makers are currently exempt from EU trade rules, allowing them to market cars through exclusive dealerships.

They argue that a supermarket-style selling system, with all brands under one roof, would not be good for consumers, who require specialist service and after-sales care.

In return for the dealerships, the Commission has been putting pressure on car makers to keep the price gap between identical models in different markets to less than 12%.

However, Monday's figures show that clearly is not happening.

In the past six months, the average price difference in the 11 eurozone countries has edged down to 19.5%.

But when the UK is included, the gap jumps to 35%.

The figure takes into account the current strength of the pound and the extra cost car makers often add to right-hand drive specification models bought in other countries.

The UK is the most expensive market for most popular car makes, from a modest Ford to a luxury Mercedes.

The EU Competition Commissioner, Mario Monti, said: "The Commission will continue to investigate possible restrictive practices applied by car manufacturers which impede citizens from buying a car in another member state.

"Any evidence of violation of EU competition rules will be prosecuted immediately. I will take into full account the companies' behaviour when proposing the Commission's decision regarding the future legal framework of car distribution."

The Commission has already fined Volkswagen for restrictive sales practices and is investigating other manufacturers, including DaimlerChrysler.

Most of the complaints made to the Commission come from frustrated UK buyers.

The new figures will provide ammunition for the European Consumers' Union, which last week urged the Commission to end exclusive car distribution and dealership arrangements when the current accord expires in October 2002.

In the UK, buyers are being advised to hold off making purchases until the government publishes its report on pricing.

As a result, sales of new cars to private buyers have slumped. However, dealers importing cars from abroad in bulk are reporting brisk trade.