Commercial Secrets Exemption
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.
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).
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.
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.
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.
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.
You will find detailed information about the commercial secrets exception, including country information, in our Archive.