Veolia has part succeeded in the Court of Appeal in withholding certain commercially sensitive information contained in its PFI waste contract with Nottinghamshire County Council. This had been requested by Mr Dowen under the Audit Commission Act 1998.

What makes this case particularly interesting is that most people would normally only think to make a request for information held by a public body via the Freedom of Information Act or, in relation to environmental information, the Environmental Information Act.

Having initially gone down this route and having been dissatisfied with the response because the information he really wanted to see had been redacted by the council (and the Information Commissioner subsequently sided with the council on this), Mr Dowen made a request under the hitherto little-known and used section 15(1) of the Audit Commission Act. Section 15 of the Act allows "any person interested" to inspect the accounts and "all books, contracts, bills, vouchers and receipts relating to them" at a council's annual audit and to take copies of those documents.

The case went to the High Court and Mr Dowen asked for disclosure of certain schedules which included information of how Veolia calculated its charges under the waste contract. They also included information on Veolia's financial model and profit margin. The High Court ordered disclosure of the requested contract schedules. Particularly concerned over disclosure of its financial model and profit margin, Veolia appealed.

Unlike the Freedom of Information Act and the Environmental Information Act, there are no built in exemptions under the Act relating to confidential or commercially sensitive information. The Information Commissioner had turned down Mr Dowen's request for certain commercially sensitive information in the waste contract, including information about costs, profits and financial models. By contrast, the High Court came to the conclusion that where the same information was requested under the Act, it couldn't be withheld - not even on the grounds that the information attracted common law confidentiality rights (which was the grounds for withholding the information argued by Veolia).

The High Court decision in the Veolia case left suppliers to the local authorities feeling vulnerable given the potential for a back door to their confidential and commercially sensitive information. As is clear from Judge Rix's comment in the Court of Appeal case, it doesn't necessarily serve the public or the public sector to allow an unchecked flow of information into the public arena either. Judge Rix said: "If the penalty for contracting with public authority were to be the potential loss of such confidential information, that public authorities and the public interest would be the losers, and the result would be potentially anti-competitive."

The flow of information into the public arena appears to have been stemmed by the Court of Appeal's judgement now that it has been held that, in some cases (i.e. this is not a blanket rule), it may be appropriate to withhold confidential or commercially sensitive information. The surprise was, however, that the Court of Appeal's conclusion was that the grounds for withholding certain confidential and commercial information of Veolia's in this case were the European Convention of Human Rights. More specifically on the basis of rights to privacy and quiet enjoyment of possessions (which the Court of Appeal concluded could also be applied to companies) - not on the basis of common law rights of confidentiality.

Veolia also argued that the public inspection provisions of the Act only permit use of the disclosed information for the purposes of the Act itself and not otherwise, so that even if inspection has to be granted, the obligation of confidence remains and is preserved outside the audit itself. The basis of this argument was Article 6 of the 2004 Directive (implemented into UK law by regulation 43 of the Public Contracts Regulations 2006) which says "...the contracting authority shall not disclose information forwarded to it by economic operators which they have designated as confidential; such information includes, in particular, technical or trade secrets and the confidential aspects of tenders".

Similar arguments have been raised before on Freedom of Information cases where information which has been requested is disclosed but to which intellectual property rights attach (the argument being that those rights still attach themselves to that information if disclosed subject to a Freedom of Information Act request). The Court of Appeal declined to give a judgement on this issue, but Judge Rix did give an indication of his views on the matter. In his view "Given the protection afforded to confidential information by the seems to me that, whatever may be the position more generally, access to the confidential information should be at the very least restricted to use only for the purposes of an audit.". Essentially his view is that information disclosed under the Act shouldn't be used by the recipient of the information more widely than for audit purposes.

This case is helpful in bringing application of the Act more in line with application of the Freedom of Information Act. The two are not, however, completely aligned. For the confidentiality exemption under the Freedom of Information Act to apply, it will be necessary to consider English common law confidentiality. If it is found to apply, then no 'public interest test' is needed because this is an 'absolute exemption'. Conversely, for requests for information made under the Act, ECHR rights to private life and quiet enjoyment of possessions will need to be considered and not common law confidentiality. Additionally, even if European Convention of Human Rights principles do apply - it would appear that there has to be some level of 'justification' to withhold the information. In essence much like a 'public interest test'.

What remains to be seen is whether the new Coalition Government's push for greater transparency of public sector bids and contracts and proposed extensions of Freedom of Information laws may open the floodgates further. More information on the Coalition Government's transparency requirements is available in our previous alert.