Google has faced repeated investigations over
the data it gathers on users
The threat comes as a four-month deadline to change the policy expires with Google making "no change" to the policy.
Google's perceived failure to act is being looked in to by data watchdogs in France, Germany, Italy, the Netherlands, Spain, and the UK.
The report said Google should do more to let users see what information was held about them, provide tools to manage this data and take more care to ensure it did not store too much data about users.
Google was given four months to comply with the working party's recommendations to bring the policy into line with European law.
In addition, said CNIL, Google was warned about the potential for action on 19 March in a meeting with officials from six data watchdogs. "No change," was seen following this meeting, said CNIL.
As a consequence, all six data protection bodies were now opening new investigations into Google and how it handled privacy. The UK's Information Commissioner confirmed it was looking at whether the policy complied but said it could not add further comment because the investigation was ongoing.
"We have engaged fully with the DPAs involved throughout this process, and we'll continue to do so going forward," added the spokesman.
News of the action comes as Google's privacy director, Alma Whitten, steps down from her job. Ms Whitten was appointed as the search giant's first privacy director in 2010, following a series of mistakes by Google that had led to user data being exposed.