The industry says it will not put a stranglehold on the market

"These record companies do not throw money into black holes and the commission fears that if they come together, it could make them into a cartel and make it virtually impossible for a rival model to compete," European competition lawyer Peter Alexiadis told the paper.

The potential for downloading music was first highlighted by Napster, which started as an independent service letting fans swap songs between themselves - a phase that ended with a copyright lawsuit from the music industry.

But that industry says it will not put a stranglehold on the download sector, and is planning to work together with a new, legitimate Napster that will launch before the end of the year.

Napster is now part-owned by Bertelsmann, who also own one of the major labels, while EMI recently announced that its music would be available on both MusicNet and Pressplay.

"There are several aspects [to Pressplay and MusicNet] that merit investigation to determine whether or not there are restrictions of competition," a spokesman for EU competition commissioner Mario Monti said.

'Looks bad'

Similar concerns were raised by a judge in the copyright case between Napster and the record labels last week.

Judge Marilyn Hall Patel said MusicNet had the hallmarks of an anti-competitive business enterprise that "looks bad, sounds bad and smells bad".

And an American congressman is trying to introduce a law that would give all download services the same access to music regardless of whether they are affiliated with the record company that releases the songs.

MusicNet is owned by AOL Time Warner, Bertelsmann, EMI and RealNetworks, while Pressplay is a joint venture by Sony and Vivendi Universal.