The auxiliary emission control devices, which could be similar to the defeat devices used in 500,000 VW and Audi vehicles in the USA and 11 million worldwide, were first uncovered by the EPA after the agency expanded a testing program to screen for defeat devices in light duty vehicles.
"In an official statement, the European Commission said "[We] are now formally asking Italy to respond to its concerns that the manufacturer has not sufficiently justified the technical necessity - and thus the legality - of the defeat device used".
FCA still isn't able to sell its 2017 3.0-liter diesel vehicles and won't be able to until it can prove that the emissions software inside of them is all legal.
Fiat Chrysler (FCAU) shares fell the most in more than four months Thursday as the heat from emissions probes on both sides of the Atlantic intensified, extending losses for a third consecutive session.
The Justice Department and the EPA have obtained internal emails and other documents written in Italian that look at engine development and emissions issues that raise significant questions, people briefed on the investigation told Reuters.
Ahead of the widely expected decision, Italian Transport Minister Graziano Delrio said he found the action "particularly disappointing".
"They [Italian authorities] still need to provide additional information that would convince us that the devices used in Fiat models are justified and can, therefore, be considered legal", an European Union source said. The Commission may eventually decide to take the country to court if it is not satisfied with the answer.
The current regulations allow governments in European Union member nations to approve new vehicles that could then be sold throughout the EU.
After Italy rejected Germany's allegations of hidden software on the Fiat 500X, Fiat Doblo and Jeep Renegade models, Berlin asked Brussels to mediate in the dispute.
Delrio, however, said the material Italy had sent to the Commission during the mediation process showed that the vehicles' approval process was correctly performed.