PARIS—For 30 years, Thierry Meaudre's family bookshop has been protected from competition from big retailers, thanks to a law that bars heavy discounting on books. Now he is hoping the French government will protect him from a new threat: the electronic book.

"I have been having nightmares about digital books for years," said Mr. Meaudre, 50 years old, surrounded by piles of colorful art books. "It's not just looming on the horizon. It's slowly becoming a reality."

While independent bookstores and small publishers in the U.S. are left to the mercy of market forces, those in much of Europe are protected. The U.K is the only large European economy that allows retailers to discount books freely, says Anne Bergman-Tahon, the director of the Federation of European Publishers.

In France a 1981 law prohibits the sale of books for less than 5% below the cover price, a move to protect independent booksellers from the narrow profit margins that big chains could absorb if they discounted books heavily. But e-books, not covered by the 1981 law because it refers to "printed volumes," typically sell for 25% less than printed works.

Now France is considering how best to stop big Internet retailers, such as Amazon.com Inc. and Apple Inc., from hurting smaller bookstores and publishers with heavily discounted offers on e-books. Sen. Jacques Legendre this month proposed a law that would allow publishers to set the retail price of e-books.