The EC's consultative document on "commercial communications" proposes to harmonise rules and regulations governing advertising, sponsorship, sales promotions and public relations.
This would mean that a UK sponsorship contract could be transferred to any other EU state. Currently such deals have to be negotiated with the individual governments But, conversely, restrictions on advertising or sponsorship in one member state could be imposed on the rest.
For example, in Sweden, the government bans advertising to children under 12. If the commission deemed this to be in the interests of all children, not just those in Sweden, it could extend the ban across Europe. The knock-on effect could seriously threaten sponsorship, not only for school sport.
A Commission spokesman spelled out these implications at a recent seminar of sponsorship and sports associations in London. He urged them to raise awareness of the benefits of professional, well-funded sports both for young people's health and society in general, because at present they were being blamed for promoting products, some of which were harmful.
"This may sound hard, but I assure you this is what policy makers at both national and community levels are charging you with," he said. Consumer associations regarded sponsorship as a particularly insidious form of advertising, he said.
The consultation paper has been supported by the European parliament but the proposals have yet to be adopted by the commission. The paper was strongly criticised by BEUC, the European consumers' organisation, for representing sponsorship in glowing terms.
Jim Murray, its director, said: "The particular focus seemed only to look upon restrictions as denying funding to good causes. Sponsorship is simply represented as a benevolent source of funds, but it does have its downside, and can have a long-term negative effect."
He said his organisation wanted individual states to have discretion over sponsorship which already varied enormously from one country to another.
Last year BEUC recommended that the EU should introduce legislation to restrict marketing in schools as well as advertising "sensitive" products such as tobacco, alcohol, toys and food.
In Britain, sponsorship in education burgeoned under Margaret Thatcher. The recently established specialist schools for technology, languages, sports and the arts were built on the success of the Conservatives' city technology colleges. Schools aspiring to this status must first raise Pounds 100,000 in sponsorship which is matched by a Government grant.
Department for Education and Employment guidelines place no restrictions on the suitability of sponsors, leaving it up to the governing bodies.
Sponsors range from British American Tobacco which funds Macmillan CTC in Middlesbrough and Archbishop Michael Ramsay technology college, Southwark, to Manchester United football club which has just donated Pounds 100,000 to Ashton-on-Mersey School, Trafford, to become a sports college.
A variety of companies including soft drink, insurance and finance houses sponsor school sports.
Mike Scott, director of both Sportsmatch and the Institute of Sports Sponsorship, said he was aware of the threat implied in the response to the Commission's proposals. He said: "I hope it's just one of those wild things that will go away."