This week the Culture and Audiovisual Affairs Council has presented a proposal for an amendment to the "Television without Frontiers Directive" originally created in 1989; a process which begain back in May of 2002. The Commission hopes the amended directive will be better suited to the age of convergence.
Currently, product placement is generally banned in all European countries but Austria, unless an imported show is being aired.
The Commission wants to leave the choice to member states whether to authorise product placement, but the proposal says it must be subject to some obligations: The product placement must be made clear in some way at the beginning of the broadcast concerned, the goods may only be placed, not praised, product placement must not take place in programmes for children, and some goods, like tobacco and prescription medicines, may not be placed.
For those who are curious, there is a PDF draft you can view here. (18pages/129kb PDF)