The European Commission investigation into Apple and the four remaining major labels over territorial price restrictions in iTunes will transform the music industry.

At issue is the fact that music lovers buying tracks in different European countries served by iTunes are forced to pay whatever price Apple charges per song on the service in that country.

Europe is concerned becuase one of the central tenets of the EU is the ability for consumers to enjoy the benefits of a single market – so in theory they should be able to buy music through iTunes at the cheapest available price, even if that price is offered by a European country other than their own.

It's not Apple's fault.

The music industry has a long-standing business model in which artists reach deals for each territory, or in which labels adopt the artist's right to their music on a trans-territorial basis.

In effect, this can mean an artist's music is available on one label in one country, and another label in the place next door. In the past, musicians have sometimes benefitted from this, as it allows them to reach a new deal with a label or publisher for each country they choose to work in.

The situation also means that labels collect royalties and other payments on a territorial basis, and it's that drive which forces Apple to force its iTunes users to pay country-specific prices.

Territorial licensing practices have also created differences in copyright law as regards music between member states. It was recent EU pressure that forced royalty collection societies to liberalise and find ways to offer pan-European collecting systems.

Observing this, Jupiter Research analyst Mark Mulligan told MarketWatch: "The music industry is built on having very clear delineation across borders. This investigation won't just deal with Apple or the major record labels, it goes right throughout the music value chain and it could be very disruptive."

When Apple set-up its original iTunes deals, the company has sought one single unified price structure for Europe, but labels had advised that legal obstacles forbade this.

The labels are understood to be denying any wrongdoing in their territorial licensing model, and are likely to vigorously defend themselves against the European investigation.

However, a report on Forbes this morning claims the EU investigation will – eventually – be resolved, with Apple unlikely to suffer sanctions.

Charges were laid this week. Companies have two months to file a written response and a further month in which they can request an oral hearing regarding the matter. If found guilty, investigators have the power to levy a fine of up to 10 per cent of a company's global turnover.