740.00119 Control (Germany)/12–2245

The Ambassador in the United Kingdom ( Winant ) to the Secretary of State

13432. Dept’s 10966, December 20, 8 p.m. Question of mandatory standards on German economic concentration discussed today with Burrows of German Dept, Lincoln of Economic Relations Dept and Ritchie of Control Office for Germany and Austria. That [They?] indicated instructions had just been sent BritEmb Washington to urge Brit viewpoint on Dept.

We were assured categorically and repeatedly that British Govt fully shared our objective on deconcentration and that its objections to mandatory standards arose solely from administrative viewpoint; i.e. they did not want a law passed which they considered unenforceable and which would impose an unnecessarily heavy administrative burden on control authorities. They maintained that any mandatory standards tight enough to be really worth while would catch many unexceptionable firms, that size alone did not make an enterprise objectionable, that attempts to enforce a law containing mandatory standards would be administratively impracticable and thereby lead to ridicule in Germany. They also attached importance to point that discretionary standards would require 4 power agreement to shut down an enterprise whereas mandatory standards would require all enterprises including unobjectionable ones not meeting them to be shut down at once with 4 power agreement required to reopen them. This they assert would freeze German economy unduly and unnecessarily. They advocate beginning by shutting down most obviously overconcentrated enterprises and proceeding progressively to close down next largest and so on down.

After stressing views given in penultimate paragraph of Dept’s 10966 we suggested that apparent unanimity of purpose should make agreement possible despite apparent flat deadlock on question of [Page 1575] whether or not law should contain mandatory standards. Making clear that we were speaking personally and with no idea whether Dept would agree we suggested possibility of strengthening article 5 of Economic Directorates draft (CORC/P) 45 (113 annex A)66 to provide that Dept’s criteria would constitute prima facie case for deconcentration of any firm not meeting them. They agreed to explore this line, expressing informal opinion they might be able to agree if it were understood criteria merely established basis for positive 4 power action to close enterprises rather than actually prohibiting them subject to exemption by agreement of 4 powers.

We suggested and they agreed that best place to work out agreement was Berlin and that it would be desirable for both Dept and FonOff, after British case had been presented in Washington, to issue new instructions to their representatives in Berlin with view to finding agreement on tightest possible administratively practicable law.

Sent Dept repeated Berlin as 426 December 22, 5 p.m.

Winant
  1. A copy of GORC/P (45) 113 Appendix A, was transmitted to the Department as an enclosure to despatch 1497, December 11, from Berlin, neither printed. According to article 5, it was provided that the following factors should be taken into account in determining which enterprises constituted excessive concentration of economic power: “Any contract agreements, combinations, or other arrangements or relationships tending towards restrictive or monopolistic practice, such as special privileges in purchase of material, right to exclusive sale, right to allocation of spheres of influence, and right to exchange of patents or technical information.” (740.00119 Control (Germany)/12–1145)