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Commercial Secrets Exemption

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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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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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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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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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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Archive

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

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Related cases

 

Relevant Cases

Title:Country:Year:Court / Arbiter:
Boniface Okezie v. Attorney-General of the Federation and The Economic and Financial Crimes Commission Nigeria 2013 First instance Public institutions must comply with requests for information within seven days. If they refuse to comply, they must supply specific bases for refusal under the FOI Act in a notice to the applicant within seven days of the request.
Charles Mwanguhya Mpagi and Izama Angelo v. Attorney General Uganda 2010 First instance In seeking disclosure of the contents of confidential oil contracts between the government and various companies, the applicants failed to meet the legal standard of Sec. 34(b) of the Access to Information Act because they did not show that the public benefit in disclosure outweighed the harm to the third parties.
Casas Cordero and Others v. National Customs Service Chile 2007 Constitutional The right of access to government information is implicitly protected by the Constitution’s guarantee of freedom of expression and the constitutional principle of a democratic republic. Information held by Chile’s Customs Agency regarding tariffs must be disclosed unless disclosure would clearly harm the legitimate commercial interests of an objecting third party.
Derry City Council v. The Information Commissioner United Kingdom 2006 First instance A contract between a public authority and a third party contractor is not subject to exemptions primarily intended to protect third parties when the exemption arguments are not raised by the third party contractor itself but rather the public authority on behalf of the third party contractor.
European Commission v. Agrofert Holding European Union 2012 International / EU EU institutions may rely on a general presumption that disclosure of documents exchanged between the European Commission and undertakings in the course of merger control proceedings undermines both commercial interests and the objective of investigative activities. The applicant may nonetheless demonstrate overriding public interest in disclosure. The presumption does not apply to internal EU documents once the proceedings are closed.
Gabi Thesing and Bloomberg Finance LP v. European Central Bank European Union 2012 International / EU The European Central Bank must refuse access to a document if there is public interest in non-disclosure due to the potential impact on the financial policy of the Union or a Member State. EU law does not provide for weighing that public interest against an “overriding public interest in disclosure.”
Garcia v. Board of Investments Philippines 1989 Supreme Applications filed by a foreign investment group to build a petrochemical plant are covered by the constitutional right to information and have to be disclosed with the exception of privileged information containing the investors’ trade secrets and other confidential financial information.
Gergely v. Ministry of Development and Economics ("the Gripen case") Hungary 2008 Appellate The Ministry of Defense, as an organ performing state functions, is obliged to disclose a list of deliverables, determined in the framework of an offset agreement between Hungary and Sweden. The fact that the overall offset procedure has not been finalized does not mean that all related documents were preparatory documents. RTI law overwrites private agreements on non-disclosure.
Greenwatch (U) Ltd v. Attorney General of Uganda and Uganda Electricity Transmission Co.Ltd Uganda 2002 First instance A power company wholly owned by the state is a government agent and therefore power agreements to which it is a party are public documents, although corporate citizens requesting access to such documents must adduce evidence as to status of their members as citizens, which an organization did not do.
H.J. Heinz Co. of Canada Ltd. v. Canada (Attorney General) Canada 2006 Supreme Third parties who apply for judicial review of a decision to disclose information under section 44 of the Access to Information Act may rely on the section 19 privacy exemption, and are not limited to the section 20 confidential business information exemption.
M & G Media Ltd v. 2010 FIFA World Cup Organising Committee South Africa Ltd. South Africa 2010 Appellate A non-government entity is a public body, and must disclose records about tender proceedings if the nature of the power and functions performed — with respect to the particular records — are public. If the entity is a private body, it must still disclose the records to the press because access to information enables the press to exercise the right to media freedom.
Nagoya Citizen Ombudsmen v. Director of the Central Japan Economics and Industry Bureau of the Ministry of Economics and Industry Japan 2001 First instance The business information exemption to FOIA only applies where there is objective evidence indicating that disclosure would result in injury to the “rights, competitive standing, or other legitimate interest” of a business entity or individual.
Navarro Gutierrez v. Lizano Fait Costa Rica 2002 Constitutional Because information of public character is necessary to the formation of free and open public discourse guaranteed by the Constitution, the Central Bank of Costa Rica must disclose a report by the International Monetary Fund containing information on Costa Rica’s economy.
Public & Private Development Centre v. Power Holding Company of Nigeria & the Honorable Attorney-General of the Federation Nigeria 2013 First instance Disclosure of information about an already-awarded contract —one that is no longer in the stages of negotiations — does not interfere with the rights of the third party contractor.
Rosen Bosev (Capital Weekly) v. Director of the Government Information Service Bulgaria 2007 First instance When a member of the public requests access to an agreement between a government agency and a third party, the government agency is required to seek consent of the third party to disclose the information; mere assertion that disclosure would harm commercial interests does not suffice.
SA Airlink (PTY) Limited v. Mpumalanga Tourism and Parks Agency South Africa 2012 Appellate Burden to justify a refusal to disclose information rests on a public body, not the requester. Parties relying on harm to third party interests to justify refusals must show that these harms are “not simply possible, but probable”. A confidentiality clause cannot shield a contract of a state body with a third party from disclosure.
SNC Lavalin Inc. v. Canada (Canadian International Development Agency) Canada 2007 Appellate Records of auditor’s working papers regarding a project involving Canadian International Development Agency and a private corporation do not constitute “confidential third party information” and “personal information”.
Stichting Greenpeace Nederland and Pesticide Action Network Europe v Commission European Union 2013 International / EU The European Commission’s refusal to grant access to documentation containing information about the pesticide glyphosate cannot be justified by reference to the commercial confidentiality or the intellectual property rights of a natural or legal person.
Thalappalam Ser. Coop. Bank Ltd. and others v. state of Kerala and others India 2013 Supreme Co-operative Society registered under the Kerala Co-operative Societies Act is not bound by right to information act to provide information sought by a citizen and that the society does not fall within the definition of “public authority.”
The Information Commissioner of Canada v. The Executive Director of the Canadian Transportation Accident Investigation and Safety Board and NAV CANADA Canada 2006 Appellate Air Traffic Control communications do not fall under the financial, commercial, scientific or technical information exemption because they do not constitute commercial or technical information. They are also not protected under the Privacy Act since communications themselves are not personal information.
Transnet Ltd. and Another v. SA Metal Machinery Co (PTY) Ltd. South Africa 2005 Supreme Parties relying on harm to third party interests to justify refusals must show that these harms are "not simply possible, but probable". A confidentiality clause cannot shield a contract of a state company with a third party from disclosure. Requesters need not show legitimate reasons for requesting information.
Trustees For the Time Being of the Biowatch Trust v. Registrar Genetic Resources and Others South Africa 2005 Appellate When denying a request for information about genetically modified corps, the burden of proof lies with the government agency. If the governmental agency is of opinion that information request is not sufficiently specific, it must assist the requester in the process.
Videocable Rivera S.A. and Others v. Communications Services Regulatory Unit Uruguay 2013 Supreme Under the Law on Right of Access to Public Information (ATI law), disclosure by the Communications Services Regulatory Unit of the number of subscribers to a television company’s services does not violate the constitutional right to privacy.