(CNN) -- European regulators need effective deterrents to stop Internet companies breaching data protection laws, according to the European Union justice department.
The call comes as data watchdogs from the UK, France, Spain, Germany, Italy and the Netherlands team up to launch a joint action against U.S. search-engine giant Google over alleged breaches of EU privacy rules.
The joint action by Europe's heavyweights is a response to Google's announcement in January on new privacy settings. The Mountain View-based group said it collects and compiles data about its users based on their activity on its various sites -- from its search page to Gmail to YouTube to phones running its Android operating system.
Yesterday, it was announced that Google's first privacy director, Alma Whitten, would be stepping down after three years in the job.
The current EU rules only allow for fines of up to 1 million euros ($1.3 million) on corporates that breach data protection sanctions.
But a new EU-wide directive that could come into force at the end of this year will give regulators the power to impose penalties of up to 2% of a multinational's global annual turnover.
Mina Andreeva, a spokesperson for EU Justice Commissioner Viviane Reding, told CNN that Google has not followed up on the "concrete recommendations" made in October last year.
Andreeva added that new rules are designed to give regulators "teeth" and ensure that companies respect consumer privacy. "We need effective and deterrent sanctions," she said, "If a big international company is fined 1 million euros, they just laugh about it and continue breaching data privacy."
Andreeva rejected the idea that the new rules will deter U.S. or non-EU companies from investing in the 27-nation single market but said that customers are not willing to trade privacy for money.
"They [Google] have a market opportunity with 500 million potential customers and this is an opportunity not to be missed but they must respect the data protection rules that we have," she told CNN.
In March, Google was hit by a fine from France's privacy watchdog, CNIL, over data obtained mistakenly through the company's Street View service. The 100,000 euro fine was the largest ever dished out by the French regulator.