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Commercial Secrets

last modified Nov 05, 2013 10:00 AM

THIS IS AN ARCHIVED PAGE. THE INFORMATION BELOW IS NOT REGULARLY UPDATED. LAST PARTIAL UPDATE IS FROM DECEMBER 2012. THE CURRENT UPDATED PAGE CAN BE FOUND HERE.

OVERVIEW

Under most information laws, trade secrets and competitively sensitive confidential business information of private and public enterprises may be withheld from disclosure. Such an exception is clearly justified insofar as it aims to prevent unfair competitive advantages or disadvantages arising from access requests. In a number of countries, however, commercial exceptions have been abused to withhold information which, once released, exposed irregularities in public procurement processes or other forms of wrongdoing.

Recommendation:

The commercial secrets exception should be formulated in terms of the specific harm it seeks to avoid, namely unfair changes to a competitive position. It should make clear that basic information relating to public procurement will be open. One  effective phrasing would be to protect "the legitimate competitive interests of a public or private entity, insofar as this is compatible with the need for public scrutiny of procurement processes."

Judicial determinations regarding disclosure or nondisclosure of business information are highly fact-specific and dependent on factors including the nature and level of competition, the circumstances under which the information was submitted to the government, and the age of the data.

The EU Access Regulation exempts documents, the disclosure of which "would undermine the protection of [the] commercial interest of a natural or legal person" (Article 4.2).

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Australia

The Federal Court of Australia ordered in Secretary, Dept of Workplace Relations & Small Business v .The Staff Development & Training Centre disclosure of parts of a government manual concerning the procedures for assessing the financial viability of tenderers for contracts. The Administrative Appeals Tribunal, on the other hand, ordered in ADI Residents Action Group and Dep't of Finance and Admin. & Anor that the development agreements governing the disposal of an ammunition factory and surrounding land could be withheld. The information included profit and risk sharing arrangements of the parties, incentives, funding proposals, and the particular methodology for managing the contract from which the parties expected to derive commercial benefit.

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Ireland

Section 27 of the Irish FOIA sets forth an exemption for trade secrets, information "whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation," and "information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates."

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Japan

A local citizens group submitted a request to examine finance-related documents that were submitted to the Central Japan Bureau of the national government's Ministry of Economics and Industry by a non-profit foundation that was formed to organize a World Exposition held in Aichi prefecture in 2005 ("Foundation").

The Ministry disclosed some of the requested documents but refused to disclose two types of information: 1) a list of financial institutions in negotiation with the Foundation to provide funding, and 2) cash flow projections for the project. To justify its withholding, the Ministry cited Article 5(2) of Japan's Act on Access to Information Held by Administrative Organs, 1999, which exempts business information from disclosure in cases where "there is a risk that public disclosure would cause injury to the rights, competitive standing or other legitimate interest" of a business entity or individual, and which applies to information created by the government itself or received from a third party.

The requester filed suit with the Nagoya District Court (court of general first-instance jurisdiction), which in Nagoya Citizen Ombudsmen v. Director of the Central Japan Economics and Industry Bureau of the Ministry of Economics and Industry overturned the ministry's non-disclosure decision. The court held that the exemption should apply only in cases where it is "objectively" shown that disclosure would present the risks stated in Article 5(2). The court further held that the government has the burden to make this showing and that the mere statement that "rules of experience" indicate that the information at issue should be kept confidential was insufficient to fulfill this burden.

The court reasoned that in light of the express purposes of Japan's access to information law, it could not recognize "rules of experience" and that it would be inappropriate to exempt all information formalistically labeled as sales, management or financial secrets. Then the court announced its core principle:

The judgment whether information is exempt must follow the Supreme Court decision cited above, the existence or non-existence of the objective risk to be determined by a comprehensive review including elements such as the nature and content of the information under review, its relationship to information already published, and specific conditions surrounding these matters.

Regarding the names of the financial institutions, the court noted that terms of the proposed loans appeared to be within a range typical in the marketplace and therefore "even if the proposed lenders names were made public, it is hard to believe this would invite scrutiny or criticism." The court concluded, "We cannot find an objectively apparent risk that disclosure of the names of the proposed financial institutions would cause injury to the Foundation's relationships of trust (with the proposed lenders) or cause difficulties in fundraising."

Regarding financial projections, the ministry withheld the information because "there is risk that citizens and public opinion would misunderstand or falsely interpret the data to be final." The Court responded that, since the data was labeled as tentative, "We do not find that, as the result of (its) release, the mass media or members of the public would misunderstand or mistakenly interpret the data and thereby create an objectively apparent risk of obstruction to the operations of the Foundation."

The government agency further argued that there was a strong likelihood that disclosure of information such as income from expected operations would injure its negotiating position with potential business partners. The court allowed, "As a general matter, it is not inconceivable that prematurely revealing the details of one's position to the other side may cause disadvantage in settling the conditions of a negotiation. However, according to the evidence, information at issue ... includes nothing more than annual amounts. We can assume that it does not include details such as which lender will provide how much funding or the conditions on the use of trademarks or joint advertising. It is difficult to conclude that disclosure of this kind of information would cause an objectively apparent obstruction to negotiations with another party or to the financial operations of the Foundation."

The Ministry appealed the Nagoya District Court's decision, but later vacated its initial determination and the appeal was dismissed as moot.

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Mexico

Article 14 of the LFTAI (Federal ATI Law) exempts "commercial, industrial, tax, bank, and fiduciary secrets" and other information designated by law as "confidential, classified, commercial classified or government confidential."  "Industrial secrets" are defined under the Industrial Property Law, 1991, as "information of industrial or commercial application that is protected . . . as confidential, in the meaning that it obtains or maintains a competitive or economic advantage over third parties in the realization of economic activities and in relation to which [the owner] has adopted measures and systems sufficient to preserve its confidentiality or restricted access" (Article 82).

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Scotland

The FOIA exempts information, the disclosure of which "would, or would be likely to, prejudice substantially the commercial interests of any person . . . ." Scottish FOIA, s. 33(1)(b). The Scottish Information Commissioner has reasoned in Mr. John Robertson, Aberdeen Journals Ltd. and the Chief Constable of Northern Constabulary that,  to satisfy the test under Section 33(1)(b), "the interests which are at risk of harm must go beyond those relating solely to the purchase by a Scottish public authority of goods and services which are required for the effective fullfilment of its functions, statutory or otherwise."

The Scottish Information Commissioner set forth the following factors, which should be considered in determining whether information is a trade secret:

  1. whether "the information [is] used for the purpose of trade";
  2. whether "the release of the information [would] cause harm";
  3. whether "the information [is] common knowledge"; and
  4. "[h]ow eas[ily could] competitors . . . discover or reproduce the information for themselves".

In Mr. K and Glasgow Caledonian University, the Information Commissioner ordered disclosure of an internal audit report relating to a review of a system purchased by a university from an external supplier. The Information Commissioner explained that the University failed to specify "the type of commercial activity that it feels would be substantially inhibited by release of the detailed computer audit report" and emphasized that an entity's "commercial interests" are likely to be narrower than its "financial interests" (para. 48).

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South Africa

South Africa's Supreme Court of Appeal ordered in Transnet Ltd. & Another v SA Metal Machinery Co (Pty) Ltd disclosure of the price and composition of a winning bid for a contract with a state-owned transportation company.

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United Kingdom

The "commercial interests" exemption of the UK FOIA provides that a government authority may withhold information the disclosure of which "would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it)" (Chapter 36, Section 43[1] The term "commercial interests" has been interpreted in the UK to relate to "a person's ability to successfully participate in a commercial activity, such as the purchase and sale of goods or services."[2] The  U.K. Information Commissioner, in determining whether the disclosure of the information would, or would be likely to, prejudice a commercial interest, takes the following factors into account:  (1) whether the information relates to or could impact a commercial activity; (2) the level of competition in the particular industry;[3] (3) whether the release of the information would "damage a company's reputation or the confidence that customers, suppliers or investors may have in a company" (mere embarrassment to a company is not sufficient); (4) whose commercial interests are affected; (5) whether the information is commercially sensitive (i.e., information that shows how a company is able to offer a certain price for its goods or services is "likely to be commercially sensitive"); and (6) the likelihood of prejudice resulting from the disclosure.[4]

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United Kingdom & Scotland compared

In the U.K. and in Scotland, the commercial interest exemption is a "qualified exemption":  first, it is subject to the prejudice test and second, as discussed more fully below, even if disclosure would, or would be likely to, result in prejudice to someone's commercial interests, the information may, nevertheless, be disclosed on public interest grounds.  The "prejudice" test under the U.K. FOIA, however, is lower than the "substantial prejudice" test under the Scottish FOIA.  As a result, information that could not be disclosed under the U.K. FOIA may be disclosed under the Scottish FOIA.[5]

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United States

The US FOIA "does not apply to matters that [constitute] trade secrets and commercial or financial information obtained from a person and [that are] privileged or confidential" (Article 552(b)(4)).  Decades of judicial interpretation have resulted in a common understanding in the US regarding the various categories of information protected by this exemption:  information may be withheld if it constitutes (i) a trade secret or (ii) information that is (A) commercial or financial, (B) obtained from a person, and (C) privileged or confidential.

In National Parks & Conservation Ass'n v. Morton, the US Court of Appeals for the DC Circuit set forth a test for "confidential commercial information" that has been widely followed in the US. Such information should be withheld only if disclosure "would (i) be likely to impair the government's ability to obtain the necessary information in the future or (ii) cause substantial harm to the competitive position of the person from whom the information was obtained." The same court subsequently held in Critical Mass Energy Project v. Nuclear Regulatory Comm'n, however, that if the information had been voluntarily provided to the government, it could be withheld if it was "of a kind that the provider would not customarily release to the public."

US courts have held that the following information could be withheld from disclosure as confidential commercial information:  business sales statistics, research data, technical designs, overhead and operating costs, and financial conditions (Washington Post Co. v. Department of Health & Human Services); data revealing assets, profits, losses, and market shares (Sterling Drug, Inc. v. FTC, 450 F.2d 698 (D.C. Cir. 1971); and information concerning a company's development of drugs and medical devices (Public Citizen Health Research Group v. FDA). On the other hand, courts have ordered (or approved) disclosure of the following information:  a report generated by General Electric that criticized its own nuclear reactor (Gen. Elec. v. Nuclear Regulatory Comm'n, 750 F.2d 1394, 1403 (7th Cir. 1984)); information pertaining to government contractors' use of "Small Disadvantaged Business" subcontractors (GC Micro Corp. v. Def. Logistics Agency); unit price data (CC Distribs., Inc. v. Kinzinger, No. 94-1330, 1995 U.S. Dist. LEXIS 21641 (D.D.C. June 28, 1995)); and the total price charged under a sole source contract (U.S. News & World Report v. Department of Treasury, No. 84-2303 (D.D.C. March 26, 1986)).

Under US law, trade secrets are recognized as a separate, and narrow, category of commercially confidential information. The courts have defined the term "trade secret" to be "a secret, commercially valuable plan, formula, process or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort" (Public Citizen Health Research Group v. FDA).

PUBLIC INTEREST AND COMMERCIAL SECRETS

The laws of several countries contain an explicit public interest override concerning confidential commercial information, compelling the disclosure of information if there is an overriding public interest in disclosure. The Inter-American Court of Human Rights and several national courts have also ruled that information must be disclosed when to do so serves a public interest, even if commercial privacy interests could be harmed.

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EU

Article 4(2) of the EU Access Regulation provides that, "[t]he institutions shall refuse access to a document where disclosure would undermine the protection of . . . commercial interest of a natural or legal person . . . unless there is an overriding public interest in disclosure."

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India

Under India's RTI Act 2005, contracts are included in the definition of information, and under section 2(j) people should be able to access a contract between a public authority and private entity, where it is "held by or under the control of" a public authority. The exemption under section 8(d) may be invoked where the information in the contract includes "commercial confidence, trade secrets or intellectual property" the disclosure of which would harm the competitive position of a third party. This is, importantly, subject to a public interest override. However, there are limited instances where this exemption would be applicable, as it is directed towards preventing industrial espionage through legal means, by for example, obtaining the formulae of a product which amounts to a trade secret.

Section 11 of the RTI Act also provides that where these contracts are to be disclosed under the Act, but include information given by a 3rd party that has been "treated as confidential" by that 3rd party, then they should be given notice of this and can make submissions about the disclosure of the information. This is again subject to a public interest override, where, except for trade or commercial secrets protected by law, disclosure may be allowed "if the public interest in disclosure outweighs in importance any possible harm or injury to the interest" of such 3rd party. However, often private companies insist on making the entire contract/agreement confidential in order to benefit from this opportunity to resist disclosure. Hence the difficulty in accessing these documents.

In the vast majority of cases, contracts should be disclosed under the RTI Act. Where they include information that may not be disclosed under the Act, such as trade secrets, there is a possibility of severing this information under Section 10 so as to supply the parts of the contracts which are not exempt.

Unfortunately, in practice these contracts are not readily available. The World Bank reported in 2006 that "Despite the fact that there are nearly 90 PPPs (public-private partnerships) in India under construction and operation, there is no publicly accessible database providing even the most straightforward information on them", and this continues to be the experience in India today. We are yet to learn of any court cases under the RTI Act which tackle this issue directly.

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Philippines

In the absence of a comprehensive ATI statute, confidentiality provisions in special laws are relied on to protect commercial secrets. The Supreme Court addressed the issue in a high profile case, Garcia vs. Board of Investments (G.R. No. 88673, 7 Sep 1989). The case involved the application by a Taiwanese private corporation, the Bataan Petrochemical Corporation (BPC), for registration as a new producer of petrochemicals in the Philippines. The Philippine Board of Investments (BOI) approved the application, giving various fiscal incentives owing to the pioneering status of the investment. The application as approved specified the province of Bataan as the site for the proposed investment. However, news broke out that the investor amended its application to change the investment site from the province of Bataan to the province of Batangas. The Congressman of Bataan (the original site) who opposed the change in location of the investment, requested the BOI to provide a copy of the original application, the amended application, and the supporting documents to each. The BOI denied the request, stating that the investor (BPC) refused to give consent to the release of the requested documents, relying on Section 81 of the Omnibus Investments Code, which states: "Confidentiality of Applications.  All applications and their supporting documents filed under this Code shall be confidential and shall not be disclosed to any person, except with the consent of the applicant or on orders of a court of competent jurisdiction."

The Congressman filed a case before the Supreme Court, which ruled as follows:

The petitioner's request for xerox copies of certain documents filed by BPC together with its original application, and its amended application for registration with BOI, may not be denied, as it is the constitutional right of a citizen to have access to information on matters of public concern under Article III, Section 7 of the 1987 Constitution. The confidentiality of the records on BPC's applications is not absolute for Article 81 of the Omnibus Investments Code provides that they may be disclosed "upon the consent of the applicant, or on orders of a court of competent jurisdiction." As a matter of fact, a xerox copy of BPC's position paper dated April 10, 1989, in support of its request for the transfer of its petrochemical plant to Batangas, has been submitted to this Court as Annex A of its memorandum.

However, just as the confidentiality of an applicant's records in the BOI is not absolute, neither is the petitioner's right of access to them unlimited. The Constitution does not open every door to any and all information. "Under the Constitution, access to official records, papers, etc. is subject to limitations as may be provided by law (Art. III, Sec. 7, second sentence). The law may exempt certain types of information from public scrutiny (Legaspi vs. Civil Service Commission, 150 SCRA 530). The trade secrets and confidential, commercial and financial information of the applicant BPC, and matters affecting national security are excluded from the privilege."

The court ordered that the petitioner could have access to BOI's records "on the original and amended applications for registration, as a petrochemical manufacturer, of the respondent Bataan Petrochemical Corporation, excluding, however, privileged papers containing its trade secrets and other business and financial information". The documents were then used by the Congressman to support his opposition to the change of location of the proposed investment. Unfortunately, the court did not articulate a test or definition of what is a commercial or trade secret. Neither has there been any subsequent case defining commercial or trade secret in the context of an exercise of the right to information. Philippine ATI lawyers are of the opinion that US law and jurisprudence would likely be cited to provide guidance in defining trade and commercial secrets.

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United Kingdom

The FOIA subjects its "commercial interests" exemption to a public interest balancing test:  even where a public authority concludes that the release of information would prejudice a legitimate commercial interest, it may only refuse to provide the information if it believes that, "in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information" (Chapter 36, Section 2). The Information Commissioner has emphasized in National Maritime Museum that "those who engage in commercial activity with the public sector must expect that there may be a greater degree of openness about the details of those activities than had previously been the case prior to the [FOIA's] coming into force." Under the U.K. law, the public interest is served where, among other factors, the release of the information would: "further the understanding of, and participation in the debate of issues of the day"; "facilitate accountability and transparency of public authorities for decisions taken by them" or in relation to "the spending of public money," as well as help ensure that "authorities do their job properly," "any misconduct is exposed," and "the public is not deceived about the way public authorities, or bodies which they regulate, operate."[6]

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OPPOSITION TO DISCLOSURE BY THE AFFECTED THIRD-PARTY SHOULD NOT BE ASSUMED

The laws of several countries expressly require the government agency to request permission to disclose information from any third party that would be affected. Failure to request permission, and assumption that disclosure would harm legitimate commercial interests, can be grounds, on its own, for compelling disclosure. Moreover, mere assertion by the third party that disclosure would harm its commercial interests should not suffice to require withholding of the information. Rather the government agency must weigh all of the considerations in reaching its decision.

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Bulgaria

On November 2, 2007, a panel of the Sofia City Court ordered the Director of the Government Information Service (GIS) to provide information to Rosen Bosev, a journalist with Capital weekly. He had requested information about the conditions under which the former minister of state administration, Mr. Dimitar Kalchev, had signed a contract with MicrosoftCompany for the purchase of software licenses for the needs of the state administration, as well as a copy of the contract itself. The issue became widely discussed after publication in the press about the increase in the number of software licenses to 48,000, which meant that the overall price had gone beyond USD $ 28 million. Moreover, the Bulgarian government had signed the contracts with Microsoft Company without a public procurement process.  In May 2007, the Director of the GIS refused to grant access to the requested information, on the ground that the conditions for the signing of the contracts, and the contracts themselves, were trade secrets and that disclosure would have resulted in unfair competition. With the legal assistance of Access to Information Programme (AIP), the journalist submitted a complaint to the Sofia City Court, whose last hearing in the case was on October 3, 2007.

In their judgment on November 2, the justices declared the refusal unlawful. Pursuant to Art. 31 of the Access to Public Information Act, the GIS should have asked Microsoft if it could release the information, which the GIS failed to do. The court also stated that even if Microsoft does not consent to the release of information, this does not mean that the GIS should automatically refuse to release the information. Instead, the GIS should weigh the various considerations, and might for instance to release at least some of the requested information.

The GIS did not appeal the court decision and it is now final and binding. However, the GIS has not yet released information about the contracts, continuing its long-standing refusal to do so. AIP, together with two opposition MPs, first requested a copy of the Microsoft contract from the then Minister of State Administration right after the first contract was signed in 2003. The Minister refused access. The refusal was challenged before the court which dismissed the claim on admissibility grounds.

For a summary of the court case, see: http://www.aip-bg.org/library/dela/case67.htm . For more information and analyses of the past proceedings, see: http://www.aip-bg.org/library/dela/case53.htm and http://www.aip-bg.org/bulletin/19_eng/01.htm .

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HIGH PUBLIC INTEREST IN INFORMATION REGARDING PUBLIC EXPENDITURES

The argument for disclosure becomes more compelling where the third-party business information relates to government contracts, commercial interests or activities of a government entity, or commercial activities on public land.  Simply stated, there is a strong, counter-balancing public interest in holding the government publicly accountable for these expenditures and activities.  Thus, although some categories of proprietary commercial information should usually be kept confidential, taxpaying citizens and businesses generally should be entitled to obtain information about public expenditures, government contracts, and other transactions and relationships between the government and private business entities.

Even the potential for some private harm from disclosure of confidential business information should yield to the broader interests of the public in gaining access where that public interest can be shown to outweigh the asserted private harm.  Often, of course, this issue is not reached, as many courts and information officials conclude, in the first instance, that the assertion that disclosure of certain information will cause harm to the business is unfounded, unproven, or exaggerated.  Often the argument against disclosure turns on a fear that public access to the information could cause embarrassment to the business implicated. But this is not a fear to which access to information regimes should accord much weight. After all, business embarrassment would also be caused by revelations of waste, fraud, corruption, or other illegality - on the part of the business or the government entity.  Yet these are precisely the kinds of cases where public disclosure provides the greatest benefits to society.

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Albania

In September 2006, the Centre for Development & Democratization of Institutions (CDDI), the leading ATI NGO in Albania, filed a request with the Tirana District Court for six items, including (1) copies of contracts with city waste collection contractors, and (2) a map with locations of waste containers. CDDI wanted the contracts because there had been serious allegations of abusive contracting by the City in this and other areas. The City did not respond or provided any information even after four court hearings. At the fifth hearing, the judge ordered the City manager to provide the requested information to the judge or face a steep personal fine (which would have been the first such order in Albania). In November 2007, at the sixth court hearing, the City lawyers provided responses to four of the information requests, but did not provide the two items described above. Regarding the requested contracts, lawyers for the City argued that "because these contracts will run out soon, CDDI can ask for the 2008 contracts as they are signed." The judge rejected that argument as irrelevant and ordered disclosure. This is the first time that an Albanian court has ordered full disclosure of a government contract (CDDI v. City of Tirana, Judgment of November 8, 2007 (Tirana District Ct)).

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Hungary

On September 8, 2008, the Regional Court of Appeals ordered the Hungarian Ministry of Development and Economics to disclose information concerning investments worth 200 billion Hungarian forints (nearly 800 million euros) that, according to the Ministry, Swedish companies had made in exchange for the purchase of (Swedish) Gripen fighter-jets by the Hungarian Air Force.

In 2001, the Hungarian Air Force had decided to purchase the Swedish Gripen-jets instead of American F-16 jets. In compliance with the contracts, 110% of the purchase price had to be invested in Hungary by Swedish companies or rather, had to be used to create export-expansion opportunities to Sweden for Hungarian companies. Two years later, the following administration ordered more advanced jets, nearly doubling the purchase price. In December 2007, the Ministry's Offset Committee informed the public that the Saab/Gripen Group had fulfilled more than 90% of the offset.

A journalist of the on-line newspaper, origo.hu asked the Ministry for information about the investments that constituted the offset. The Ministry refused on the ground that the information was a commercial secret, and the journalist, represented by the Hungarian Civil Liberties Union (HCLU), initiated a Freedom of Information lawsuit in December, 2007. The object of the lawsuit was to find out which Swedish investments had been counted by the Ministry. In mid-August 2008, the Saab/Gripen Group issued a press release stating that it had fulfilled all of it duties - worth almost 800 million euros - according to the contract. The original term, cited from the 2001 contract, was due to end in 2015. The press release also stated that the Ministry had approved the completion of the contract on March 27th, 2008.

The Regional Court of Appeals stated in Gergely v. Ministry of Development and Economics ("The Gripen Case") that the requested information is unequivocally of public interest since the fighter-jets were purchased from public funds and the information requested by the journalist is closely connected to the purchases. The Court stated that the Ministry is obliged to issue the precise list of companies that received shares from the offset program. According to the Ministry's files - to which the Ministry's lawyers referred during trial - there are approximately 80 such companies.

HCLU conducted a well organized public campaign to inform citizens about the case and ask them to petition the Ministry to release the court-ordered information. HCLU took this action because the government generally files appeals as long as possible, and the HCLU feared that the government would do so in this case. The campaign was a successs. On November 7, 2008, the Ministry released the requested information. Attached are the contract in English and the list of companies that benefited from the Swedish investment in Hungarian. The verdict and the release of information are widely viewed  to be of great significance.

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Ireland

In McKeever Rowan Solicitors and the Department of Finance, the Irish Information Commissioner ordered the disclosure of certain information regarding a public procurement contract.  The requester sought information related to "the tender competition for appointment of advisors to the Minister of Finance on the sale of ICC Bank."  The Department of Finance refused to provide the records, asserting several exemptions, including the "commercially sensitive information" exemption under Section 27(1)(b) of the Irish FOIA. The sensitive information included the rates paid by the Department to the solicitors who won the contract. On appeal, the Information Commissioner reasoned that "once the successful tenderers' proposed fees became the contract rates, the Department could not reasonably be expected to keep that information or any of the other contract terms confidential in the absence of exceptional circumstances."  Fee rates, terms of payment, and other details necessary to understand the nature of the procured services must be made public once the contract has been awarded, even if the disclosure of such information "could reasonably be expected to result" in some competitive harm to the third party submitter of the information.  The Information Commissioner reasoned that, "on balance, the public interest was better served by the release of this information in light of the significant need for openness and accountability in relation to the contract."[7]

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Mexico

In Juan Gabriel Gutierrez Orozco v. Mexican Petroleum (File No. 2717/06 (2006)), the Mexican Federal Access to Information Institute ("IFAI") ordered disclosure of (1) the names and addresses of liquefied petroleum gas ("LPG") distributors that had purchased LPG from Pemex, a state company in charge of all exploitation and first sale of such products, and (2) Pemex's sales volumes.  The Mexican Access Law allows submitters of confidential information to designate the information as such and states that the government may disclose the confidential information "only with the express consent of the individual to whom that confidential information belongs" (article 19). However, the confidential information may be withheld on these grounds only if it falls within one of the statutory exemptions.  With respect to names and addresses of LPG distributors, because LPG distribution was licensed by the federal government, which was required to make public its list of licensees under the Access Law, the IFAI determined that the information should be disclosed.  With respect to sales volumes, the IFAI recognized that specific sales information "might be of utility" to the distributors' competitors and that Pemex had taken steps to maintain confidentiality of the information.  But because petroleum is national patrimony under the Mexican Constitution and because Pemex's aggregate sales data are indicative of its use of public resources, the IFAI concluded that disclosure of such aggregate data "would contribute to the objectives of the Access Law to enhance the transparency and accountability of public administration."

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Slovenia

In Applicant Against the Conduct and the Decision of the Municipality of Radovljica (2004), the Slovenian Commissioner for Access to Public Information held that the applicant was entitled to view the agreements relating to the management of apartments owned by the Municipality.  The municipality had refused to allow inspection because the documents were "trade secrets," exempt from disclosure under Article 6 of the Slovenian Act on Access to Public Information. The Commissioner noted that the procedure for awarding a public contract, including eligibility and compliance with contract criteria, cannot be treated as a trade secret.  In permitting inspection, the Commissioner held that the applicant's request was a matter of public interest because: (1) "[b]y making the information public, the transparency, the suitability of public funds management and prevention of corruption are ensured," (2) "[t]he citizens and tax-payers have the right to know how public funds, which have been entrusted to the government, are spent," and (3) "[c]ompetition among the tenderers on the market is ensured."

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United Kingdom

The typical factors that are weighed in determining whether the public interest override applies in the public procurement context include (1) transparency and accountability for the spending of public money; (2) protection of the public (i.e., where the public authority has the information regarding the quality of a private company's products or the conduct of a company); (3) circumstances under which the public authority obtained access to the information; and any (4) competition-related issues.[8]

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United States

In Martin Marietta Corp. v. Dalton, Martin Marietta, a defence contractor, sought to prevent the Department of the Navy's Naval Air Systems Command from disclosing (1) cost and fee information, (2) component and configuration prices, and (3) technical and management information. The DC District Court found that Martin Marietta failed to show how it would be injured by disclosure of the information, stating that:

[I]n perhaps no sphere of government activity would [the statutory purpose of shedding light on agency performance] appear to be more important than in the matter of government contracting.  The public, including competitors who lost the business to the winning bidder, is entitled to know just how and why a government agency decided to spend public funds as it did; to be assured the competition was fair, and, indeed, even to learn how to be more effective competitors in the future.

For these and other reasons, the court ultimately ordered the release of the contracts at issue in the case.

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HIGH PUBLIC INTEREST IN INFORMATION RELEVANT TO PUBLIC HEALTH, SAFETY, OR THE ENVIRONMENT

The laws of several countries provide, or have been interpreted to provide, that the protection of public health, safety, and the environment or the need to avert imminent harm to persons may outweigh business interests in confidentiality.

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Canada

Section 20(6) of the ATIA confers on the head of the government institution the authority to exercise his or her discretion to disclose, inter alia, otherwise confidential information if such disclosure would be in the public interest "as it relates to public health, public safety or protection of the environment and if the public interest in disclosure clearly outweighs in importance any financial loss or gain to, prejudice to the competitive position of or interference with contractual or other negotiations of a third party." The courts have interpreted this discretion as unfettered and bound only by well known considerations that discretion be exercised having regard to the principles of natural justice, in accordance with relevant law and having regard only to relevant considerations (Rubin v. Canada (Minister of Health), at. 6-7).

The public interest override applies only to third party interests set out in paragraphs 20(1)(b),(c) or (d). It does not apply to the trade secrets of a third party as set out in paragraph 20(1)(a). If the records relate to public health, public safety or protection of the environment the government institution is to ask third parties to furnish not only representations as to why they consider that the information should be exempted, but also reasons why disclosure in the public interest should not outweigh in importance the injury involved.

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Japan

In Futaki v. Japan Tobacco Company Biotechnology Center (2002), the Osaka High Court held that the interest in public health outweighed the interest in business confidentiality and ordered the disclosure to Mr. Futaki of  requested documents.  These included floor plans and specifications of the Japan Tobacco Company ("JT") Biotechnology Center, a major genetic laboratory, "where disease is cultivated and injected into lab animals and where gene-splicing and other biotechnology experiments take place," constructed "in the midst of a crowded residential area."[9] The government officials had rejected Mr. Futaki's request, claiming that the disclosure of the documents would result in significant injury to JT's competitive position."  JT argued that disclosure would enable "competitors to learn details of the design and construction of the facility. The Osaka District Court upheld the city's decision to withhold the information, concluding that the documents qualified for protection under the relevant law and that the risk of harm to the community if the documents were not disclosed was insufficient to warrant disclosure.  On appeal, the Osaka High Court overturned the lower court's decision.  The High Court "agreed with the lower court determination that release of the documents would cause competitive injury to JT but concluded that "the level of 'risk of injury to human life, the human body or health' was sufficient to override the business interest and require disclosure.'"[10] Mr. Futaki had requested the information shortly after the Great Hanshin Earthquake, which caused massive structural damage to several buildings in the area, and the documents might provide some comfort regarding the threat of biohazards in the community.

In Japan, the following are some of the types of information that have been disclosed in the public interest:  "the names of companies with large numbers of complaints for fraudulent sales practices, details of the disposal of industrial wastes, and a wide variety of information concerning real estate."[11] In one of the most important cases interpreting the public interest override under Japan's FOI law, the national administrative appeals board recommended the disclosure of "a list of hospitals that had distributed a blood coagulant tainted with hepatitis viruses," despite the risk of "severe economic injury to the listed entities."

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Scotland

The Ministers Code of Practice states that "[w]here disclosure is necessary for the protection of public health, public safety or the environment, for example, such considerations may outweigh financial loss or prejudice to the competitive position of a third party" (para. 46).

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South Africa

In Trustees for the Time Being of the Biowatch Trust v. Registrar Genetic Resources and Others the High Court ordered the Registrar of Genetically Modified Crops to release information pertaining to the use of genetically modified organisms (GMOs) in South Africa, including certain risk assessment data, to Biowatch.  The registrar initially refused to disclose the information on the ground that the disclosure of such information would harm the commercial and financial interests of Monsanto and several other companies.  The court placed the burden of establishing that a refusal of a request for access is justified on the parties claiming the refusal. Section 36 of the Promotion of Access to Information Act provides that access to a record may not be refused if it consists of information "about the results of [any] investigation" performed by or on behalf of a third party "and its disclosure would reveal a serious public safety or environmental risk."   The court noted the potential dangers to public health and environmental safety that result from GMO experimentation and concluded that disclosure of most of the requested information was in the public interest (para. 53-65).

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RELEVANT CASES

(click on the table headers to sort table rows)

Case titleCountryYear
Secretary, Dept of Workplace Relations & Small Business v .The Staff Development & Training Centre Australia 2001
ADI Residents Action Group and Dep't of Finance and Admin. & Anor Australia 2001
CDDI v. City of Tirana Albania

2007

Rosen Bosev from Capital Weekly v. the Director of the Government Information Service

Bulgaria

2006
Rubin v. Canada (Minister of Health) Canada 2003
Gergely v. Ministry of Development and Economics (Gripen case) Hungary 2008
McKeever Rowan Solicitors and the Department of Finance Ireland 2003
Eircom Plc and the Department of Agriculture and Food; Mr. Mark Henry and the Department of Agriculture and Food; Eircom Plc and the Department of Finance and Eircom Plc and the Office of the Revenue Commissioners Ireland 2000
Nagoya Citizen Ombudsmen v. Director of the Central Japan Economics and Industry Bureau of the Ministry of Economics and Industry Japan 2001
Futaki v. Japan Tobacco Company Biotechnology Center Japan 2002
Juan Gabriel Gutierrez Orozco v. Mexican Petroleum Mexico 2006
Garcia v. Board of Investments Philippines 1989
Legaspi v. Civil Service Commission Philippines 1987
Mr. John Robertson, Aberdeen Journals Ltd. and the Chief Constable of Northern Constabulary Scotland 2006
Mr. Alfred Weir and Fife Council 
Scotland 2006
Mr. K and Glasgow Caledonian University Scotland 2006
Applicant Against the Conduct and the Decision of the Municipality of Radovljica Slovenia 2004

Transnet Ltd. & Another v SA Metal Machinery Co (Pty) Ltd.

South Africa 2006
Trustees for the Time Being of the Biowatch Trust v. Registrar Genetic Resources and Others South Africa 2007
Derry City Council United Kingdom 2006
Invest (Northern Ireland) v. Secretary of State for the Home Office United Kingdom 2006
Maritime and Coastguard Agency United Kingdom 2006
National Maritime Museum United Kingdom 2005
National Parks & Conservation Ass'n v. Morton United States
1974
Critical Mass Energy Project v. Nuclear Regulatory Comm'n United States 1992

Washington Post Co. v. Department of Health & Human Services

United States 1982
Sterling Drug, Inc. v. FTC 
United States 1971
Public Citizen Health Research Group v. FDA United States

1983/1999

Gen. Elec. v. Nuclear Regulatory Comm'n 
United States 1984
CC Distribs., Inc. v. Kinzinger 
United States 1995
U.S. News & World Report v. Department of Treasury 
United States 1986
Martin Marietta Corp. v. Dalton United States 1997

[1] The risk of prejudice "must be established at the time of the making of the request" (Derry City Council).  The risk of prejudice "being suffered should be more than a hypothetical or remote possibility; there must [be] a real and significant risk" (Invest (Northern Ireland) v. Secretary of State for the Home Office).

[2] Freedom of Information Act Awareness Guidance No. 5, Commercial Interests, p. 4.

[3] The factors suggest that in the absence of competition, disclosure is not as likely to adversely affect a commercial interest.  However, the competitiveness of the particular market, without more, is insufficient to "meet the test of prejudice" (Invest (Northern Ireland) v. Secretary of State for the Home Office).

[4] Freedom of Information Act Awareness Guidance No. 5, Commercial Interests, p. 7 (explaining that "prejudice" from the disclosure need not be substantial, but must be more than trivial and adding that "there must be a significant risk rather than a remote possibility of prejudice"); see also Maritime and Coastguard Agency.

[5] FOI (Scotland) Act 2002 Briefings Series, Commercial Interests and the Economy (Section 33).

[6] Freedom of Information Act Awareness Guidance No. 5, Commercial Interests, p. 8; Freedom of Information Act Awareness Guidance No. 3, The Public Interest Test, p.5.

[7] Similarly, in a group of public contract cases, the Information Commissioner ordered the disclosure of invoices paid to telecommunications companies by the Department of Finance and several other agencies, Eircom Plc and the Department of Agriculture and FoodMr. Mark Henry and the Department of Agriculture and Food; Eircom Plc and the Department of Finance and Eircom Plc and the Office of the Revenue Commissioners.  The Information Commissioner concluded that, the significant "public interest in ensuring the maximum openness with regard to the use of public funds, particularly, but not exclusively, with a view to ensuring that public bodies obtain value for money when purchasing telecommunications services" outweighed any public interest in protecting the commercial interests of the telecommunications companies.

[8] Freedom of Information Act Awareness Guidance No. 5, Commercial Interests, p. 7-8.

[9] Lawrence Repeta, Business Confidentiality Versus Human Health:  the Role of Japan's Information Disclosure Laws (2006), at 4-6, 9.

[10] Lawrence Repeta, Business Confidentiality Versus Human Health:  the Role of Japan's Information Disclosure Laws (2006). In reaching this conclusion, the Osaka High Court focused on whether the activities conducted by JT Biotechnology Center were "the kinds of activities for which society would require 'special safety measures'" at 22 (quoting Osaka High Court Decision, 2002, Sec. II.5).  The High Court concluded that they were, noting the following:  "Because there are aspects [of recombinant DNA technology] for which it cannot be said that sufficient experience concerning its safety has been accumulated, it is important that any and all appropriate measures be employed to prevent injury from unforeseeable and unknown dangers before it occurs."

[11] Lawrence Repeta, Business Confidentiality Versus Human Health:  the Role of Japan's Information Disclosure Laws (2006) at 3-4.