"Hungary is depriving cable operators of their right to provide broadcasting transmission services wherever they see fit," said Competition Commissioner Neelie Kroes said in the statement.
"This restricts competition both among cable operators and between infrastructures to the detriment of consumer choice."
Hungary's Media Act currently prevents single cable television providers from offering cable services to more than one third of the population.
The EC say that this is in contravention of an EU competition directive, which prevents member states from imposing restrictions on the "provision of electronic communications".
The EC says that if Hungary fails to reply to the current warning within two months the case may be referred to the European Court of Justice.
