Just close the iTunes store and see them cry. Apple does not make that much from the iTunes store and it is unlikely to affect their bottom line much.
Just shut it down and shut them up. There are others with their own proprietary scheme out there, why they don't go after them too?
IMHO they are Apple bashing, close the store. F$%* them.
If Apple did close the iTunes store to the whole of Europe (which incidentally is a bigger market than the USA) the only people that would be crying would be Apple shareholders as sales of iPods and other Apple products would collapse.
No one is picking on Apple. If this is forced through it will be applied to everyone else as well - Apple is in the spotlight as the market leader.
Plenty of other companies that have broken the rules have been hit by the EU before, Microsoft got fined €500 million (about $600 million) for anti-competitive behaviour and there is the potential for more trouble for them with Vista.
The EU does do some really stupid stuff, but at least they've got the bottle to take on any company when they step out of line. Though at present it appears to be Norway that is the most vocal in their criticism and they are not part of the EU (Europe and the EU are two different things).