Brussels opens the door to US-style product placement in TV programmes

American-style product placement - or "stealth advertising" - took a big step closer to Europe's television screens when formal proposals were tabled to allow its use in broadcasting.

If the plans are approved, a new and more subtle form of advertising, in which film-makers are paid to feature specific products, could become a common feature in almost all programmes on commercial terrestrial TV.

Yesterday's proposal from the European Commission is part of a package of revisions to broadcasting rules that would scrap a daily cap on time devoted to advertisements, as well as some rules on space between commercial breaks.

In the United States, product placement is already common, growing at the rate of 21 per cent a year between 1999 and 2004, and worth 1.7 per cent of the total broadcasting revenue of free-to-air broadcasters.

Pioneered in Hollywood, where big box-office hits such as the James Bond movie Die Another Day promoted BMW bikes and Omega watches, product placement has moved to TV. The series Desperate Housewives was paid to use a Buick car in one storyline, while another US series is said to have included more than 7,000 items of product placement.

Though many of these have already found their way on to Europe's TV screens, the European Commission says that only one nation - Austria - has comprehensive rules in place to define product placement and permit it under certain conditions.

Under the Commission proposal, which needs the backing of the EU member states and MEPs, consumers would be warned at the beginning of programmes if product placement has been used. However EU nations themselves would decide on the form of that announcement.

Tobacco and prescription drugs would not be allowed under the product placement rules but there are no general restrictions on alcohol advertising. There would be no product placement in news and current affairs and broadcasts aimed at children.

Launching her plan, the European commissioner for media and the information society, Viviane Reding, said that regimes in different EU countries were "absolutely contradictory". Ms Reding added that rules were necessary to safeguard a productive audio-visual sector in Europe.

A Commission document argues: "Europe's unclear, disparate, rules on product placement or in some cases a lack of rules, have so far prevented audio-visual content producers from making use of this important means of financing." It adds: "The goal is to increase consumer information while acknowledging that product placement is a form of advertising and that it should not interfere with editorial independence."

The new regime would be brought in by updating the 1989 TV without Frontiers Directive. The revised directive would ban product placement that misleads the consumer but permit it providing it is identified at the start of the programme.

The move has caused concern among some MEPs however. Philip Whitehead, a Labour Euro-MP and former TV producer, said: "If we switch to product placement it is hard to see that this will be a small part of the mix. It will become, pretty quickly, a dominant element in it. Whatever people say about this having always been in movies it is soon going to become an indispensable part of TV stations' revenue. There is a danger that, where they are hooked on that revenue they are unable to distinguish how far to go." The directive would also impose a limit of 12 minutes' advertising per hour but broadcasters would be able to choose when to insert commercials and would not be forced, as at present, to allow 20 minutes between breaks.

The directive, designed to keep pace with the change in broadcast technology, would not apply to so-called non-linear services such as on-demand films or news which a viewer "pulls" from a network.