The European Commission proposed more unannounced inspections of food companies and tougher fines for labelling fraud today, after the discovery earlier this year that millions of Europeans ate horsemeat labelled as beef.

If approved by EU governments and lawmakers, the new rules would force member states to impose fines equal to the financial gains from proven cases of food fraud, officials said.

Unidentified criminal gangs blamed for Europe's horsemeat scandal are believed to have made huge profits by substituting millions of tonnes of cheap horsemeat for more expensive beef in products including meatballs and lasagne.

EU governments have in the past been reluctant to agree to minimum financial sanctions mandated by Brussels, but the Commission believes the desire to reassure consumers in the wake of the horsemeat scandal could swing the debate.

"Crime must not pay, but if the penalties are low it does pay," EU consumer commissioner Tonio Borg told a news conference to present the plans.

Penalties for the type of labelling fraud used in the horsemeat scandal vary from state to state. A conviction in Britain may draw a jail term of up to two years, while in France the maximum penalty is a fine of 187,000 euros.

The proposals would also force governments for the first time to carry out a minimum number of unannounced inspections on food operators, to check that the contents of their products match what is written on the label.

Europe's horsemeat scandal broke in January when horse DNA was found in frozen burgers sold in Irish and British supermarkets.