An increasing number of organisations are affected by the Freedom of Information Act 2000 ("FOIA") by their dealings and exchange of information with public bodies. Much of the information shared will be commercially sensitive, such as regulatory information exchange or bidding for a particular contract. There have been a number of recent cases demonstrating the difficulties with seeking to rely on the exemption in s43 FOIA (where disclosure would or would be likely to prejudice the commercial interests of any person) to withhold contractual documents.
- Clear and persuasive evidence of "a very significant and weighty chance" of any disclosure causing prejudice that is "real, actual and of substance" is required to successfully rely on s43.
- Although the position will vary from case to case, the high threshold means s43 is generally a weak exemption and it is sensible to ensure that if material is of commercial sensitivity it is protected in other ways.
- A specific obligation of confidentiality will greatly assist in the protection of confidential and sensitive information.
- Contract documents must be disclosed despite evidence of commercial prejudice
In Wiltshire Council v Information Commissioner EA/2015/0114 (29 March 2016) the First-tier Tribunal (Information Rights) considered a contract between the Council and BT which formed part of an approved state aid scheme subsidising rural broadband services. A request was made under FOIA for various documents including broadband contracts, recent progress reports and progress review meeting minutes. The Council withheld certain information under section 43(2) of FOIA, arguing that disclosure would prejudice its and BT's commercial interests. In addition, since s43 is a qualified exemption (meaning that even where it can be shown that the exemption is engaged it is still subject to a public interest test to determine whether disclosure should still be made in the public interest) the Council argued that the public interest lay against disclosure.
The Information Commissioner had already considered the request and the Council's response to it, and had placed great emphasis on the public interest in transparency given that BT was receiving substantial public money. He had therefore ordered disclosure of the minutes and contract. The Council and BT appealed, focusing in particular on parts of the contract which they argued BT's competitors could use to their advantage such as the speed and coverage template (SCT), implementation and project plans and milestone payments table. BT provided evidence as to the prejudice that would be caused by disclosure, such as allowing competitors to see how BT would approach different situations and what technical solutions BT would propose to use in certain circumstances.
The Tribunal accepted that the SCT engaged section 43(2), but in fact that document had been overtaken by subsequent events. When considering the public interest in disclosure the Tribunal commented that publication of an outdated document may lead to confusion, and therefore in this particular situation the public interest lay against disclosure of the SCT.
In relation to the other disputed information, the Tribunal held that the implementation and project plans engaged no FOIA exemptions, since they were specific to Wiltshire and said very little about the competence, effectiveness or approach of BT, so would be of little use to competitors. In addition the Tribunal was not satisfied that the claimed exemptions applied to the milestone payments table since similar information had already been disclosed by Oxfordshire County Council, meaning that any prejudice would likely already have occurred.
This decision demonstrates the robust approach taken by the Tribunal and the significant public interest in transparency where public funds are involved, even in the face of detailed evidence from a commercial third party as to the prejudice that would be caused by disclosure of particular information.
A similar approach, and outcome, was apparent in Eustace v Information Commissioner EA/2016/0008 (12 April 2016) which concerned contracts for advertising space on bus shelters. Requests were made for financial information such as the timing of payments, financial benefits for the Council and any discounts received by the Council.
The Information Commissioner originally considered that s43 FOIA applied and the public interest in transparency relating to public funds was outweighed by the potential undermining of the Council's bargaining position in future negotiations.
The Tribunal however reached a different view. They took into account the fact that other local authorities may have been willing to disclose similar information, which they considered had some bearing on the question of likely prejudice. Further the Tribunal considered that taking the requested information alone, it would be difficult for competitors to draw reliable inferences on which they could rely to gain any advantage. Finally the Tribunal accepted evidence that there were only two main players in the relevant market who already had a clear picture of each other's pricing methods. The Tribunal was not therefore persuaded that either the Council or the contracting party was likely to suffer prejudice to its commercial interests.
- Practical points that could impact reliance on s43
In London Legacy Development Corporation v Information CommissionerEA/2015/0223 (11 April 2016) the disputed information was contained in a concession agreement held by West Ham Football Club for their use of the Olympic Stadium. The arguments used to try to prevent disclosure included the potential for damaging the negotiating position of the public authority as against other parties by releasing the terms of its deal with West Ham. Ultimately the Tribunal took the view that this was self evidently a unique situation and that therefore the scope to prejudice other negotiations was limited. Although it was accepted that there may be some commercial prejudice by disclosure, it did not amount to "a very significant and weighty chance" of causing prejudice that is "real, actual and of substance".
The Tribunal noted that the concession agreement itself had designated certain information as "Commercially Sensitive" in various schedules. However the disputed information did not fall within that designation. Although this was not of itself determinative it significantly impacted the weight given to the evidence now being put forward trying to argue that this particular information was highly commercially sensitive. It indicated that at the time the agreement was entered into this information was not considered highly sensitive as it was not designated as such. It was noted that the agreement was negotiated using a leading firm of solicitors and the Tribunal did not accept that the parties had simply failed to spot certain sensitive parts of the agreement when going through the process of designation.
The Tribunal also repeated a point made in many similar cases, namely that the agreement was entered into with full knowledge that FOIA would apply, which is true of any private sector entity contracting with a public authority. Therefore the arguments as to a potential chilling effect on other private sector organisations contracting with public bodies if sensitive information was released were not accepted.
In these proceedings West Ham, as the commercial counterparty, did not seek to participate in the Tribunal proceedings and did not put forward a witness. Failure to expose evidence to cross examination by producing a witness significantly reduced the weight to be attached to the evidence of commercial sensitivity.
The various cases considered above highlight the high threshold that is required even to engage s43, and the difficulties in then outweighing the inherent public interest in transparency over how public bodies are applying their funds. These points will apply to almost all commercial dealings and documents shared with public bodies. Where truly confidential information is to be shared the parties should therefore consider a formal confidentiality agreement which would give better protection to the information (although even there the confidentiality could be outweighed in the public interest). If sensitive information has been shared and reliance is placed on s43 in subsequent proceedings it is worth bearing in mind the usefulness of evidence directly from the affected commercial party.