Tag Archive for exemptions

The Exemption Index: Section 43 – the exemption for commercial interests

Exemption Index logoFOIMan examines the commonly used exemption protecting information which if disclosed would prejudice commercial interests.

Summary

You’re a public authority and you want lots of companies to bid for your contracts so that you can ensure that you pay as little as possible for a good service. In order to ensure that the company you hire knows what it’s talking about, you need them to give you lots of information about their methods, and what they in particular can bring to the contract. But you’re worried that FOI will scare them off because anything they give you could become fair game for their competitors.

Then imagine yourself on the other side of a commercial venture. Your company has a great opportunity to pick up a valuable public sector contract. But dare you entrust your methods – which have been developed at great expense and through years of experience – to this public body? If your competitors got hold of your methodology and pricing structure, your advantage over them will be wiped out overnight. You’d be back to square one.

These concerns are what section 43 of the Act is designed to allay. The exemption provides a way to block disclosure of information that will harm the commercial interests of both public bodies and other organisations that they do business with. But it is a qualified exemption – subject to a public interest test – so there are no absolute guarantees…

This exemption is closely related to section 41 – the exemption for information provided in confidence, and may well apply where the specific requirements of that exemption mean that it can’t be used to protect documentation.

Information affected

Information that would (or would be likely to) affect the commercial interests of any party – including the public body itself. Could include documentation relating to procurement activities – contracts, tender submissions, sales figures, an authority’s purchasing position, but also things like a public body’s own marketing activities or products it has developed in a competitive market-place (eg course documentation in the higher education arena – though see comments below).

Things that FOI Officers need to know

  • the first subsection provides protection for “trade secrets”. This isn’t defined in the Act, but one Tribunal gave the example of the secret recipe for Coca-Cola (para 52). We might also refer to the “Colonel’s secret recipe” or Tony the Tiger’s special formula (if you’re of a certain age). Basically, it should be information used in business that is highly confidential, which gives its owner a competitive edge. Importantly, it shouldn’t be possible for someone to discover or reproduce it (para 53). There isn’t a great deal of case law on this subsection, perhaps because in most cases such information would be encompassed by the absolute exemption at section 41.
  • Some people think that the “trade secrets” exemption is an absolute exemption – this isn’t true. It is necessary to conduct a public interest test, even if you are convinced that the information concerned is a “trade secret”.
  • The more commonly used subsection at section 43 is the one for where disclosure “would, or would be likely to, prejudice the commercial interests of any person.”
  • The first stage in applying this subsection of the exemption is to establish whether the information is commercial in nature. “Commercial interests” can be interpreted broadly (para 42) (though see the discussion of financial interests v commercial interests under Things that requesters need to know below). Activities relating to the purchase or sale of goods or services (p4) can be described as commercial; but also anything affecting an organisation’s ability to be competitive in a market place. It is perfectly feasible for a public authority, even one that operates as a charity, to have commercial interests (para 31).
  • Given that both companies selling goods or services to public authorities, and the authorities themselves, can have commercial interests, it is important to state whose commercial interests you think will be prejudiced by disclosure. It may, of course, be both in some circumstances.
  • The next step is to set out what prejudice you envisage (p6) – in other words, what is the harm in disclosure? The widely accepted approach to this is set out in Hogan v IC, and summarised in the Commissioner’s guidance. You must remember to state how likely you consider the prejudice to be – choose between “would” and “would be likely to”.
  • If you are arguing that a third party – for example, a contractor – will be prejudiced by disclosure, make sure you consult them. The Commissioner and Tribunals have made clear (para 24) that they want to see evidence of the third party’s views.
  • As always, you must set out which information the exemption applies to. In relation to procurement activities, guidance issued by the Office of Government Commerce (OGC) has been recognised by Tribunals as being a useful guide as to what should and shouldn’t be withheld. One Tribunal indicated (para 87) that authorities should have to justify departing from this guidance (especially if withholding information that the OGC guidance indicates can be disclosed).
  • This subsection of s.43 is also subject to a public interest test. The OGC guidance referenced above states that: “[t]here is a strong public interest in showing who public money is being spent with, how much public money is being spent…and how the supplier arrived at the price…”.  Against that, many of the arguments an authority sets out as to the prejudice that disclosure would cause may well also serve as arguments as to why withholding the information would be in the public interest. For example, there is a public interest in public bodies being able to contract services effectively, so anything which prevents that (such as companies being fearful that commercially sensitive information will be disclosed to their competitors) will not be in the public interest. Generally speaking, it is not in the public interest for the market for particular goods or services to be distorted, through, for example, a company’s ability to compete being damaged. In the Student Loans Company case (para 55), the Tribunal took the view that damage to the ability of the company to pursue debtors was a valid argument in support of the exemption.
  • One area that has proved controversial is course materials. Whilst generally recognising that the organisation producing them has commercial interests (para 31), the Tribunals have proved reluctant to accept that disclosure would be likely to have a prejudicial effect. Universities have struggled to make this argument, but training materials developed by other public bodies are also difficult to withhold. The Commissioner does, however, appear to accept that in some circumstances, the exemption will apply to course materials – particularly where the materials are unique and the producer of the materials is operating in a competitive commercial environment.
  • As with many exemptions, there is the option to “neither confirm nor deny” whether information is held if it would or would be likely to prejudice the commercial interests of any party.

Things that requesters need to know

  • First off, has the public authority applied the exemption correctly? One common mistake is the conflation of “commercial” with “financial” interests. In Department for Work & Pensions v IC & Zola, the Tribunal agreed with the Commissioner in stating that possible increased expenditure on benefits was a financial interest, not a commercial one.
  • It’s not enough that there are commercial interests affected. The public authority has to demonstrate that they would, or would be likely to be, prejudiced. This was the problem that University of Central Lancashire had.
  • Public authorities should not apply “blanket” exemptions to whole contracts. It is necessary for them to analyse which sections need to be withheld (see the analysis at para 90), and to disclose the rest.

Essential case law

Recommended reading

FOI Man says…

Take it Online

FOI Man explains that online discussion between FOI Officers is part of the job, not a nationwide conspiracy.

I’ve become aware of a new form of twisted corruption that FOI Officers are prey to. And been shocked to realise that I too am amongst the shadowy forces at work. Our crime? Subscription to an email discussion list.

Of course, most professions have such a resource. In my own organisation, I know that the Finance Officers follow lists for Finance Officers; the Facilities Officers follow lists for Facilities Officers; and the Chief Executive follows a list for Airline Pilots…no, sorry, Chief Executives. Most people would recognise that this is a cost effective way for professional people, geographically separated, and often isolated in their own organisations, to share best practice and find solutions to common problems.

So why is it that when FOI Officers do this, we are accused of collusion and conspiracy? I know of one requester who had seen the content of correspondence on the list (notably out of context) and complained that all the correspondence was about how to stop information being disclosed. This apparently demonstrated that not only those who posted messages, but also those who read them, were acting against the spirit of the legislation.  Oh right then, case closed.

Of course all the discussion is about how to stop information being disclosed!!! Our jobs are easy when information can unquestionably be sent out. We don’t need to discuss those cases because they are uncontroversial and can be easily resolved. Applying exemptions is the most difficult part of our jobs (which, by the way, means that we use them as sparingly as possible). That’s the stuff we need the help of our fellow professionals with.

It is helpful to know that if you are considering using an exemption, you are not straying far from the pack. But equally, if there are Officers posting to the list arguing that an exemption can’t be legitimately applied, that can lead others to look again and maybe reach a different conclusion. What’s more, there’s no imperative for FOI Officers subscribing to the list to go along with what others are proposing to do. It’s a matter of choice for each institution, quite rightly, how to respond to specific requests.

This ‘revelation’ (which as far as I know, no FOI Officers have ever sought to hide) has prompted some requesters to threaten ‘investigations’. They are speaking to the Information Commissioner. To the media. To Uncle Tom Cobley. To all.

I don’t blame requesters for being unhappy with our responses. I am happy to look again and ask more senior officers to review how I’ve handled requests. That’s the process. I don’t even blame them for asking questions when they receive similar responses from several organisations (but isn’t that pretty likely? If you’ve asked a question about an issue that is sensitive to one organisation, the chances are that it is sensitive to all).

But for goodness sake, can we please be allowed to do our jobs? In an informed way without every routine action that we take being seen to be a conspiracy? What next? Will FOI Officers be banned from reading my blog in case I corrupt them with my dark and cynical ways?

Believe me requesters when I say that if you think that the problems with FOI lie with FOI Officers talking to each other, you are barking up the wrong tree.

Why the public interest test is so important

Most exemptions are subject to a public interest test. But why is it so important to ensuring that the Freedom of Information Act works?

If you make FOI requests, you probably hate it when public authorities respond citing an exemption. If the Bill that the Labour Government first presented in 1999 had stood, all requesters would have remained frustrated.

The Bill allowed for appeal to the Information Commissioner. But the Commissioner would only have been able to advise public authorities to disclose information. Few, if any exemptions were subject to a public interest test. So the Commissioner would only have been able to advise disclosure if it was clear that the public authority had mistakenly applied an exemption. Let’s take a look at what that means.

I’ve carried out a rough and ready survey of the decisions reached by the Commissioner in 2008 relating to one of the exemptions, section 36 (prejudice to effective conduct of public affairs). Section 36 is a very broad exemption and has been criticised in the past because of this. In 2008, 30 decision notices were issued relating to the exemption. In 21 of these cases, the Commissioner found that the information did fall within the exemption. Not really terribly surprising given the breadth of the exemption.

But of those 21 cases, the Commissioner ordered disclosure in 13 cases because he found that the public interest test had been applied incorrectly. And that’s why the public interest test is so important. If all the Commissioner could consider was whether an exemption applied, his power to challenge public authorities’ decisions would be very limited. The public interest test has empowered the Commissioner to take a broader view, and as a result has really given the FOI Act teeth.

So what is the public interest? It’s not defined in the Act, but it is a well known concept in law. In a high profile Australian court case, it was defined as:

“…a term embracing matters, among others, of standards of human conduct and of the functioning of government and government instrumentalities tacitly accepted and acknowledged to be for the good order of society and for the well-being of its members…events of interest to the public may or may not be ones which are for the benefit of the public; it follows that such form of interest per se is not a facet of the public interest.” (DPP v Smith [1991] 1 VR 63 at 75 for those lawyers amongst you who like to check my facts)

Or, as the Information Commissioner’s guidance more succinctly put it, the public interest is that which serves the interests of the public, not necessarily that which the public is interested in. So whenever we apply a qualified exemption (which is most of them), we have to consider whether the public will be better served by disclosure or by withholding the information.

The Environmental Information Regulations explicitly say that public authorities should presume that information should be disclosed when considering the use of exemptions. But the FOI Act, believe it or not, doesn’t actually say that. In practice though, the courts have found that there is an assumption that information should be disclosed running through the Act. It is, after all, called the Freedom of Information Act.

This means that one of the arguments for disclosure is always that there is a public interest in accountability and transparency. There may well be arguments in favour of disclosure in addition that are specific to the information requested. So, for example, it might be argued (and often is) that as an issue is currently the subject of controversy, there is a public interest in disclosing such information so that public debate can be well informed. The arguments for disclosure can be very general, yet they should be given considerable weight.

The next step is to consider the arguments against disclosure (and in favour of applying the exemption). Of course, in truth, unless we (or at least somebody in the public body) thought there were strong reasons for withholding the information, we wouldn’t even have started down this route. Try making an FOI request to a public body for its written consideration of the public interest in cases where the information was eventually disclosed – there won’t be any record. Part of the FOI Officer’s role is to be aware of case law and have a sense of whether or not withholding information is viable. If we don’t believe that a public interest can be successfully argued, expect us to resist the reliance on an exemption in the first place. Of course there are times when we have to find arguments even if we don’t think there is a strong case, but it is usually possible to find reasons – there is generally some grain of justifiable concern if someone is insisting on withholding the information, even if we’re not necessarily convinced that it would survive an encounter with a member of the Commissioner’s staff.

So what does survive an encounter with the Information Commissioner or the Information Tribunal? Analysis of their decisions demonstrates that it is about how convincing the argument is. It will be more convincing where an authority is able to produce evidence of the damage to the public interest. A great example I saw recently was when a University argued successfully in favour of section 36 to withhold a list of email addresses for all their staff. Quite often in the past, the Commissioner has ruled in favour of disclosure in these kind of cases, but what I think was different about this case was that they were able to produce evidence, in the form of experience of previous accidental disclosures, that disclosure could cause significant disruption to the university, and that this was not in the public interest.

The public interest test is a complex process. You can’t say for sure, whether you’re a public authority or a requester, which way appealed decisions will go. It ensures that the application of exemptions is fluid, that FOI doesn’t become trapped in the year 2000 when the Act was passed. It’s a brilliant mechanism and one that shouldn’t be underestimated in any assessment of how important the Act is in practice.

 

Exemptions

Exemptions have always been contentious. FOI Man provides a glimpse behind the scenes of how the decision to apply them is taken.

Back in the early noughties, when I was nought but an FOI Boy, the BBC showed a drama featuring Matthew Macfadyen as a young left wing activist gradually becoming disillusioned by the Labour Government’s attempts to water down their Freedom of Information Bill. MM does a fine line in moody young men, and he was particularly cross about the number of exemptions in the finished Act.

Exemptions have remained a contentious issue ever since. My own view is that MM was unduly concerned. Whilst there may be a large number of exemptions in the Act, experience has shown that there are also pretty strong checks and balances on their use. But more on those later.

Most requests result in full disclosure. You might not believe that if you read most commentary about FOI, but the statistics across the public sector bear me out (as I’ve discussed in a previous post). Some requests are too broad and require clarification, or are refused on cost grounds. But a minority are refused and an exemption (or exception under EIR) cited.

In my experience, it is rarely the FOI Officer who decides whether information should be withheld. Normally it is someone in the department that holds the information who suggests that there might be a problem with disclosure, and the ultimate decision to use an exemption will usually be a senior officer’s. The FOI Officer’s role is to advise whether information can be withheld where concerns are raised, and if so to ensure that the case for using the exemption is robust, by gathering evidence, and that statutory requirements, such as providing a meaningful refusal notice, are met.

The exception may be where an FOI Officer is familiar enough with the information requested to know that there may be problems with disclosure. Or, for example, as FOI Officers are often also responsible for Data Protection compliance, when information contains personal data relating to third parties. And on occasion, we may be aware from other sources (eg email discussion lists, other FOI Officers dealing with the same request, etc.) that we might need to consider using an exemption. But I’m always at pains to make clear to colleagues that it is their responsibility to highlight material that shouldn’t be released.

But they don’t need to know about exemptions. When we were preparing for FOI coming fully into force on 1 January 2005, our training courses for colleagues tended to dwell excessively on examinations of the various exemptions available. It only dawned on me later that this wasn’t necessary – and in fact became a hindrance because as we all know, “a little bit of knowledge is a dangerous thing”.  So nowadays if I’m training colleagues or advising them on answering a request, I focus on the key message – consider the harm of disclosure. If they can explain to me what the harm would be, I can then decide if an exemption can be justified.

The sorts of exemption that apply are obviously different from one part of the public sector to another. Central Government departments in particular are going to be most uneasy about policy matters and requests for information relating to ministers. The police are of course going to hold a lot of information that relates to law enforcement and that will be reflected in the kinds of exemption that they use. Other organisations may hardly use anything except the exemption for personal data. So very few, if any, FOI Officers will have used all of the exemptions available – usually they will know about a small sub-set that is relevant to their organisation. It’s a cause of some excitement when we get to use a new one! (or maybe that’s just me…)

Third party data is a particularly tricky problem. Much information held by public authorities was given to them by, or relates to, other organisations or individuals. This could include businesses providing them with services or tendering for contracts, individuals responding to a consultation, even other public bodies that the authority is working with. The Section 45 Code of Practice makes it clear that public bodies should consult third parties when they are considering disclosing data relating to them. But equally it is clear that it is the duty of the public body in receipt of a request to decide whether or not to disclose information. If the third party doesn’t want you to disclose information it can cause a great deal of grief, especially when they have a limited understanding of the obligations that public authorities are under.

FOI Officers and other staff dealing with requests can sometimes find themselves put under a lot of pressure to withhold information. Often they can see the case for the exemption and are happy to make it. On other occasions, they may well argue hard in favour of disclosure with varying results (one of the most common being a funny look from colleagues who are now convinced that they’re not a team player). Sometimes they end up having to make the case for an exemption that they disagree with.

This is not easy, especially if it is appealed as far as the Information Commissioner. One of the trickiest exchanges I had with a case officer from the ICO related to information provided by a very powerful third party. My organisation was under pressure not to disclose that information, and in truth we wanted the ICO to order us to disclose so that we could show that we’d done all we could. But I couldn’t tell the ICO that and they wouldn’t make a decision without more information from us as to how the exemption applied. So for a while we were at stalemate (and the poor requester was still waiting).

At least nowadays, there is plenty of case law to go on. Back in 2005, we were making it up as we went along, and it’s no surprise to me that a backlog built up very quickly at the ICO. Once that case law started to become available, and the ICO’s guidance adjusted as a result, we were able to make decisions on exemptions from a more informed standpoint.

There are two aspects of the Freedom of Information Act as passed which mean that Matthew Macfadyen’s character can sleep easy in his bed at night. Neither thing, bizarrely enough, was in the original Freedom of Information Bill at its First Reading. They were both introduced during Committee Stage – so Tony Blair didn’t have it all his own way. One is the power of the Information Commissioner to order disclosure (as opposed to just ‘advising’) and the other is the public interest test for most exemptions. In a further post I’m going to talk about how we apply the public interest test and why I think it is so important.

If you don’t use it, you won’t lose it

If you think about FOI as a children’s colouring book (just go with me on this), the lines were drawn by the legislation. The decisions of the Information Commissioner, Information Tribunals, and the courts add the colour, taking great care not to go over the lines. FOI Officers are not lawyers (in the main), but if we’re to be effective, we need to keep an eye on these decisions. Sometimes they can be very interesting, especially if you’re an FOI geek like me.

For those who aren’t familiar with the FOI appeal process, here’s a brief précis. If a public body refuses your request, you can ask it for an internal review of the decision. If they still refuse, you can appeal to the Information Commissioner. At that point, the Commissioner can either uphold the authority’s decision, in which case, you can appeal to the Lower Tier of the Information Tribunal, or he can instruct the authority to disclose the information, in which case, they might appeal to the Tribunal. Further appeal can then be made to the Upper Tier Tribunal (you used to go to the High Court on points of law at this stage), and if there are still points of law at stake, you or the authority concerned can appeal to the Court of Appeal. And then to the Supreme Court. Let’s not go any further or the Daily Mail may get excited.

Last week I was fortunate enough to attend a free seminar given by 11KBW (whose blog on information rights law, Panopticon, is well worth a look) on latest developments in information law. One of the barristers speaking, Robin Hopkins, explained the implications of a decision made by the Upper Tier of the Tribunal, and I sat up sharply in my seat. The decision related to requests submitted to the Department for the Environment, Food and Rural Affairs (DEFRA) and the Home Office. I’ve been thinking about it ever since, and sad as it may seem, I spent some of my Sunday afternoon reading the full decision.

The Upper Tier Tribunal was looking at an issue that has troubled a few sittings of the Tribunal. When a public authority refuses to provide information, it must write to the applicant and explain which exemptions apply and how it has reached that decision. But what happens if the applicant appeals to the Commissioner, or even the Tribunal? Can the authority suddenly decide that another exemption, not already relied upon, is relevant?

Previous Tribunal decisions have suggested that it is entirely at the discretion of the Commissioner or the Tribunal to decide on this. The only way that an authority could guarantee that an exemption would be taken into account would be if it had included it in its response to the applicant. In other words, “use it or lose it”, which explains why many authorities throw everything including the kitchen sink at requests for particularly sensitive information. The new Upper Tribunal decision from Judge Jacobs takes a new line. He ruled that authorities have the right to introduce new exemptions at a later stage. This would mean that the Commissioner and the Tribunal have to consider exemptions (or exceptions under EIR) raised late in the day by authorities.

This sounds at first hearing to be a bit lenient on public authorities, and I can understand (and so could Judge Jacobs to be fair) why it won’t go down well with some observers. But I also think that it’s the right approach.

The point is that exemptions are usually there to protect other individuals’ and organisations’ rights. As Jacobs points out:

“If [the public authority] is not allowed to change its position to rely on another exemption, this may hamper a full consideration of the public interest and prevent the interests of third parties being taken into account.” (GIA/1694/2010 and GIA/2098/2010, para. 29)

Let me illustrate this through a hypothetical situation. Somebody has requested details of a meeting between the police and a government body about knife crime. One of the attendees was a family member of a victim of knife crime, there to describe their experience. It was a traumatic and difficult experience for them, but they agreed to take part on the understanding that their involvement wouldn’t be known outside the meeting. The authority refuses the request on grounds of s.31 (law enforcement), but when it gets to the Commissioner, he rules that while the exemption applies, the public interest is in favour of disclosure. The authority then realises that it should also have claimed s.40 (personal information) and/or s.41 (information provided in confidence) in respect of the details of the member of the public who had had such a traumatic experience. Does the Commissioner rule that the details of that person should be disclosed, purely because the authority had failed to raise the need for the exemption in their original response?

Of course not, and in fairness to the Commissioner, it is likely he would have used his discretion to allow the use of the exemption in this situation. But Judge Jacobs argues that it is only by analysis of individual circumstances that it will be possible to identify whether exemptions should be allowed. If the Commissioner or Tribunal used their discretion not to allow late use of exemptions, they might not give sufficient consideration to important issues affecting third parties.

In fact, the ruling suggested further that:

“…it is necessary for the Commissioner to take the initiative in appropriate circumstances and to do so as a matter of duty, not of discretion.” (GIA/1694/2010 and GIA/2098/2010, para. 49)

In other words, the Commissioner also has a duty to identify exemptions that might apply that the authority has missed. This again, makes sense, however unpalatable it may be for the Commissioner’s Office. Surely they have to ensure that their decisions don’t cause harm (or prejudice, to use the legal jargon), and that has to mean looking beyond just what the public authority may have argued. After all, shouldn’t the Commissioner’s staff be better informed than most on the application of exemptions?

I can’t say whether the information requested in these cases should have been disclosed or not (that wasn’t looked at in the ruling). But I do think that Judge Jacobs got it right on this important, if technical, point.

Exemptions (or exceptions) either apply or not. He argues that information and the exemptions that protect them are “intimately connected”. Sensitive information shouldn’t lose its protection just because of human error at an early stage in dealing with a request. If you don’t use exemptions, you won’t lose the opportunity to introduce them at a later stage. This decision is particularly important because of its recognition of the practicalities of managing the FOI process:

“Legislation has to be interpreted so that it is workable. No administration is perfect. Documents can be misplaced, overlooked or difficult to find. Officials may fail to identify the potential application of exemptions.” (GIA/1694/2010 and GIA/2098/2010, para. 35)

I can’t imagine that I’m the only FOI Officer who will appreciate this recognition of the realities of how FOI works in our organisations. Nobody’s perfect, and third parties certainly shouldn’t have their rights infringed just because of that eternal truth.