The Secretary of State to the Consulate at Strasbourg 1
4. Dept forwards fol info for guidance in possible discussions Andrews and Koren with secretariat and delegs to Council of Eur [Page 782] on subj proposed cartel control problem which is on agenda and for background info other missions:
- Although encouraging from standpoint growing awareness of problem of restrictive business practices that Council considering action believe better to have any special mechanism to deal with restrictive business practices established within OEEC which already working on related problems, trade liberalization, etc., and where US can exert greater influence. A proposal along these lines has been suggested to ECA and is being considered by them. For urinfo it contemplates a body within OEEC which wld have power investigate restrictive business practices on complaint, findings of fact from which wld be turned over to participating countries. By this procedure danger of officially sanctioned restrictive agreements wld be minimized.
- Registration and authorization of restrictive business contracts as suggested by Econ Comite is not sufficient for effective action against cartels and other restrictive agreements which interfere with Eur recovery. Attempt to set up distinction between “good” and “bad” cartels also places difficult burden on control staff to prove case against “bad” cartels. Difficult for outsiders to determine proper price or production policy in each case, especially on basis of registered contract only. Agreements among firms to fix prices, control output, etc., shld per se place burden proof on all firms or parties to agreement that understanding does not adversely affect competition. More suitable system is that envisaged in Chap 5 ITO which provides for complaint and investigation and wld be more apt achieve objectives sought in ITO Charter. It must be kept in mind contracts alone reveal nothing about way they are implemented. Only by complaint and investigation of actual operation cld manner in which restrictive agreements are operated be discovered. Furthermore, setting up of supra-national body as evidently envisaged by Council, without adequate national legis, wld be ineffective.
- We believe Eur consumer interest and gen polit interest in Council in raising standard of living of people of Eur cld be better served by concentrating efforts to influence member nations to adopt adequate anti-cartel legis and by putting spotlight of publicity on restrictive business practices in order obtain objectives sought in Chap 5 ITO Charter.
- Council of Eur can serve as useful forum to stress need for concept of expanded economy with practical application of econ progress to greatest nr, thus aiding to rebut Commie propaganda that West not interested in organizing econ reform and favoring monopolists.
- Attn of delegates and secretariat might appropriately be brought to sections in ECE Annual Survey of Eur for 1949 which points out [Page 783] ill effects of restrictive business practices in Eur, especially section in Chap 4, and study of problem which ECE secretariat has been authorized to undertake.
- If Consul has Feb 20 edition of Current Econ Developments on file, material contained therein on effects of restrictive business practices may be useful to you in discussions.
- Message drafted by Herman H. Barger of the Commercial Policy Staff, and cleared by Raymond Vernon of the Commercial Policy Staff, Miriam Camp of the Bureau of European Affairs and, “in substance,” by the Economic Cooperation Administration. It was repeated to Paris as 720, to London as 723, to Brussels as 181, to The Hague as 167, and to Rome as 562.↩