The European Commission has opened a formal antitrust investigation into business practices by Amazon.com to discover whether the company's contracts with publishers has thwarted competition.
The Commission said it has concerns that favourable terms have made it difficult for e-book distributors to compete with Amazon, leading to a reduction in choice for customers.
The Commission said in a statement: "If confirmed, such behaviour could violate EU antitrust rules that prohibit abuses of a dominant market position and restrictive business practices."
EU Commissioner in charge of competition policy Margrethe Vestager said: "Amazon has developed a successful business that offers consumers a comprehensive service, including for e-books.
"Our investigation does not call that into question. However, it is my duty to make sure that Amazon's arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon. Our investigation will show if such concerns are justified."
Amazon.com told IBTimes it was "confident that our agreements with publishers are legal and in the best interests of readers. We look forward to demonstrating this to the Commission as we cooperate fully during this process."
This latest investigation is not Amazon's first brush with the EU. In March the European Court of Justice ruled that Luxembourg, home to Amazon's European HQ, and France needed to introduce far higher VAT rates for the sale of e-books.
The European Commission also ruled in January that a tax deal between Amazon and Luxembourg which led to the company paying considerably lower levels of tax than other organisations was illegal.