Britain has said Spain is still acting illegally by imposing "politically motivated" checks at its border with Gibraltar.
Many residents of Gibraltar reacted angrily to the news that Spain has been cleared of wrongdoing over stringent border controls that caused long traffic queues.
The European Commission has urged UK and Spanish authorities to work together and "strengthen dialogue" at the Gibraltar border.
An EU Commission statement suggested "daily cooperation between the authorities working on each side of the border" to help combat tobacco smuggling.
Commuters faced delays of several hours over the summer caused by stringent checks imposed by the Spanish during a diplomatic row over an artificial reef sunk off Gibraltar.
The European Commission said Spain should "optimise" its profiling system at the Gibraltar border "in order to reduce the large amount of random border controls".
However, the EU said the Spanish authorities had not broken any EU laws with its tight border checks.
"The Commission has not found evidence to conclude that the checks on persons and goods as operated by the Spanish authorities at the crossing point ... have infringed the relevant provisions of Union law," it said in a statement.
The EU Commission has said it has found no evidence that checks by Spanish authorities at the Gibraltar border broke European law.
The European Commission will make "key announcements" about the Gibraltar border issue within the next hour, a spokesperson said.
Olivier Bailly from the EU Commission said on Twitter that there would be "messages for both Spain and the UK" in a press conference at 1100 GMT:
The president of the European Commission José Manuel Barroso has spoken on the phone with Spain's Prime Minister Mariano Rajoy about the tensions over Gibraltar:
They agreed that a Commission fact finding mission should as soon as possible examine in loco the border control/movement of people and goods questions.
President Barroso expressed his hope that Spain and the UK will address these matters in a way that is in line with their common membership in the EU.
Jonathan Todd the European Commission spokesman on Employment, Social Affairs and Inclusion told ITV News that; "some of the stories are quite harrowing. We've had people who've broken their arm who are in pain... but have been told they cannot have treatment."
Spain's director of general services and pharmacy has said that hospitals in the country always ask people whether they want public or private care.
Agustín Rivero was responding to complaints that a number of UK holidaymakers were refused care in Spain, despite showing an European Health Insurance Card (EHIC).
They have sent us four very specific cases. Four cases. We're talking about 500,000 [foreign citizens receiving health care].
Even if it were only one case, logically it would have to receive the same treatment as a Spaniard, and we have talked to health services and hospitals about those four cases.
What the insurance companies have told the UK government does not coincide with what our hospitals report. In those four cases, the patients themselves signed their consent requesting private care.
Mr Rivero said 50 million people visit Spain every year, adding: "I'd like to know if other European countries have the same percentage of this problem as we do."
Everything you need to know about the EHIC, which gives UK residents free or reduced-cost state healthcare when travelling in Europe.Read the full story ›