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Brussels (AFP) - The EU launched legal action against Hungary on Thursday over a crackdown on foreign-backed civil society groups that critics say targets US billionaire George Soros.
The move came hours after the government of Prime Minister Viktor Orban said it would end a poster campaign attacking Soros that has been accused of anti-Semitism.
Brussels also announced that it is advancing a separate case over an education law that could shut a Soros-backed university, risking a fresh confrontation with Orban.
"We have studied the new law on NGOs carefully and have come to the conclusion that it does not comply with EU law," European Commission Vice President Frans Timmermans said.
"We await a reaction from the Hungarian authorities within a month," after which the matter could go to the EU's top court, he said.
The Hungarian government said it would "not bow to pressure from the EU."
Hungary's parliament approved the law last month which will force groups receiving more than 24,000 euros ($26,000) annually in overseas funding to register as a "foreign-supported organisation", or risk closure for non-compliance.
They will also have to use the label "foreign-supported organisation" on their websites, press releases and other publications.
Orban's government says the measures are aimed at improving transparency as well as fighting money laundering and terrorism funding.
Hungary's deputy justice minister Pal Volner said in a statement said the government would "represent Hungary’s interests with every means possible".
"We regard it as extremely revealing that it is precisely those political activist groups that are refusing to conform to the new law and to register that receive a significant part of their funding from George Soros's network."
Rights groups however hailed the EU decision.
"Today's action from the European Commission sends a strong signal that such onslaughts against civil society are not acceptable in the European Union," Amnesty International's Iverna McGowan said.
- 'Anti-Semitic' posters -
Separately, the EU said it had moved onto the next formal stage in a legal case that it launched against Hungary in April over an education law, sending Budapest a "reasoned opinion" about the clash between that legislation and EU law.
"We expect a reaction from the Hungarian authorities within a month. If the response is not satisfactory, the commission can decide to go to the court," Timmermans said, referring to the European Court of Justice, the EU's top judiciary body.
Budapest has been outspoken in its opposition to Soros, claiming that his donations of billions of euros (dollars) to rights groups in the region are a bid to force Hungary to take in migrants.
Brussels launched legal action against Hungary, Poland and the Czech Republic last month over their refusal to take their share of migrants under an EU scheme aimed at easing the pressure on Mediterranean states from Europe's migrant crisis.
But the campaign against Soros has stepped up in recent weeks with the posters showing the Hungarian-born Jewish emigre laughing, with the caption: "Let's not let Soros have the last laugh". Some have been daubed with graffiti such as "Stinking Jew".
Soros, 86, called the imagery "anti-Semitic" in a rare statement Tuesday.
A Hungarian government statement said the campaign, which also included print, radio and TV ads, would end on Saturday, three days before a visit by Israeli Prime Minister Benjamin Netanyahu.
Government officials insisted the campaign was not about Soros's background but informing Hungarians about the security risks posed by his alleged support for mass immigration.
The Hungary row shows how the EU is becoming increasingly split between western nations and newer eastern members, many of which have concerns about sovereignty and immigration.
Brussels also announced on Wednesday that it was taking Poland's right-wing government to the EU's top court over logging in an ancient forest, the latest in a series of confrontations with Warsaw.