The investigation targets both fixed and mobile Internet providers and the results will be published by the end of the year.
The findings could lead to new rules that bar Internet providers from blocking voice-calling applications such as Skype or slowing down certain video-streaming services.
"I am absolutely determined that everyone in the EU should have the chance to enjoy the benefits of an open and lawful Internet, without hidden restrictions or slower speeds than they have been promised," said Neelie Kroes, the EU's commissioner for the digital agenda.
She said that the European Commission, the EU's executive, would not only rely on the findings of the national telecommunications regulators, but was also asking consumers and businesses to point out problems.
The EU's examination of Internet providers' practices is part of a wider debate on the principle of "net neutrality" both in Europe and the United States.
Advocates of net neutrality say that all online services should be treated equally to foster competition and innovation. Internet providers, meanwhile, argue that they have to manage traffic to ensure bandwidth-hungry services like video streaming or voice-calling function properly.
So far, the European Commission has taken a relatively business-friendly approach to net neutrality, betting that new telecommunication rules that come into force next month will create the competition and transparency necessary for a fair and consumer-friendly market.
In its report Tuesday, the Commission says "it is widely accepted" that providers have to slow down some services to allow others to work.
"A consumer's experience is not affected if an email reaches him a few seconds after it has been sent, whereas a similar delay to a voice communication would cause it to be significantly degraded, if not rendered entirely useless," the Commission said.
As long as there is enough competition among Internet providers, users can vote with their feet and make sure they get the service they want, Kroes said.
According to that logic, new rules that allow consumers to switch mobile-Internet providers within a working day while keeping their number should eventually eliminate operators that block or charge extra for using a calling application like Skype - as some do in Austria, Germany, Italy, the Netherlands, Portugal and Romania.
However, Kroes said that there are concerns that some Internet providers are not transparent about the services they block or the downloading speeds they offer - thus keeping consumers from making informed choices.
Kroes cited the example of an unnamed U.K. operator that was reportedly making "Skype calls technically impossible in afternoons and evenings without warning the users."
She also pointed to claims that some Internet providers were slowing video streaming provided by a competitor to "degrade the quality of the content."
The Commissioner warned that if the investigation supported those allegations she would "publicly name operators engaging in doubtful practices" by the end of the year and could eventually come up with more stringent guidelines and specific legislation on net neutrality.
"Mark my words," Kroes said. "If measures to enhance competition are not enough to bring Internet providers to offer real consumer choice, I'm ready to prohibit the blocking of lawful services or applications."