Spain's Gibraltar checks lawful - EU
Checks by Spain at its border with Gibraltar did not break EU laws, the European Commission has ruled.
Madrid imposed strict controls at the border with the British territory amid a row over the creation by Gibraltar of an artificial reef in disputed waters.
The commission's ruling followed a UK complaint and it has also written to the UK and Spain with recommendations to avoid future delays at the border.
But the UK still says the "politically motivated" checks were unlawful.
The commission, which assessed the legality of the checks on 25 September, advised the UK and Spain to work better together to help fight tobacco smuggling and cross-border crime.
The BBC reported in August that cigarettes were about 40% cheaper in Gibraltar than they were in Spain, fuelling an illegal trade. At the time Spain said the border checks were intended to combat this smuggling.
The Spanish government says it seized 139 million illegal cigarettes smuggled in from Gibraltar last year - double the figure for 2009.
The report gives both sides six months to respond to the recommendations, and Brussels "reserves the right" to revise its view on the legality of Spanish action and "pay another visit" to the Spain-Gibraltar crossing point if necessary.
The commission said that the crossing point was "challenging, in view of the heavy traffic volumes in a relatively confined space and the increase in tobacco smuggling into Spain".
In its letter to Spain, the commission recommends it makes better use of existing traffic lanes or adds new lanes on the Spanish side of the border and uses more targeted checks "to reduce the large amount of random border controls".
In its letter to the UK, the commission recommends the development of risk-based profiling of travellers and improved laws and safeguards against tobacco smuggling.
Both countries were asked to develop an "exchange of information" with each other about tobacco smuggling.
A Foreign Office spokesman said: "We welcome the fact that the commission has put Spain on notice. We continue to believe that Spain has acted unlawfully."
He added that despite the commission not finding evidence that EU law was infringed it "is not the same as concluding that Spain had not acted unlawfully".
And he said the UK did "not rule out taking direct legal action against the Spanish government" at the European Court of Justice over the border delays.
The Gibraltar government said it also still considered the checks to be unlawful, but said the recommendations made by the commission represented progress.
Chief minister Fabian Picardo said Gibraltar had "called on the commission to recommend practical measures to ease frontier flow. That is what they have done and we welcome the fact that they have called for Spain to stop the random checks that they have been implementing".
Sir Graham Watson, a Lib Dem MEP for the South West of England and Gibraltar, said he was "deeply disappointed" the commission considered no laws were breached.
But Spain's Deputy Prime Minister Soraya Saenz de Santamaria said Madrid was "satisfied because Brussels has signalled that we did not break any community rules by establishing those controls at the Gibraltar border".
The row broke out in July when Spanish authorities increased checks at the Gibraltar border.
Gibraltar, though, said the strict checks came after it dropped 74 concrete blocks into the sea next to its territory, intended to create an artificial reef and encourage sea life to flourish.
Spain said the blocks would disrupt waters used by its fishing boats, but denied that the development had prompted its increased border checks.