Public interest outweighs commercial sensitivity in financial information held by council

Written on 28 Oct 2016

Suppliers to the public sector will should take notice of the latest case in which the commercial sensitivity of information held by the public body has been overridden by public interest considerations.

This case, which related to a proposed wind turbine development, has added support to the view that it is becoming more and more difficult to rely on commercial sensitivity exemptions to the disclosure of information under the Environmental Information Regulations 2004 (EIR) (and for the same reasons, the Freedom of Information Act 2000). Reliance on these exemptions will require specific and detailed reasons as to why it is not in the public interest to disclose the information.

What was the dispute about?

The case of Peter Higham v Information Commissioner and another (EA/2015/0078) involved a request made to Cornwall County Council under the EIR regarding the Council’s financing of the erection of 9 wind turbines on 6 different sites. The Council refused to disclose this information, on the grounds that the information was commercially sensitive, and disclosing it would harm the Council’s bargaining position with future developers.

The Council claimed exemption from disclosure under Regulation 12(5)(e), on the grounds that the information was commercial, and confidentiality was provided by law to protect a legitimate economic interest. Regulation 12(5)(e) is, however, subject to Regulation 12(1)(b), which states that such information may only be kept confidential if “in all the circumstances of the case, the public interest in maintaining the exception outweighs the public interest in disclosing the information”.

The information requested was “a total general costs summary over the period of the programme for all of the 6 sites; and revenue and income figures over the period of the programme for each of the 6 individual sites”. Clearly, the information was commercial in nature, so the question was whether the confidentiality protected a legitimate economic interest, and if protecting this interest outweighed the public interest in disclosure.

What did the Tribunal decide?

The Council’s refusal to provide the requested disclosure was upheld at first instance by the Information Commissioner. That decision was then appealed to the First Tier Tribunal.

In that appeal, the Tribunal considered two questions:

(a) Was the commercial sensitivity exception engaged under Reg. 12(5)(e); and

(b) If so, did the public interest in disclosing the information outweigh the public interest in maintaining confidentiality?

The Council argued, with regards to (a), that the information was commercially sensitive since it could be used by future developers to undermine the Council’s negotiating position. By using the aggregated financial data, future developers would be able to tailor tenders to specific sites. While the Tribunal did not consider that there was a real prospect of a developer being able to apply aggregate data to an individual site, it did consider that knowledge of the costs the Council incurred in developing the site would hand developers some ideas of how they could adjust financial elements of their tender to their own advantage. The Tribunal found that the Council’s arguments were “just sufficient to support a finding that the exception was engaged”, although they were “not supported by compelling evidence or reasoning.”

The Tribunal then had to consider the second question regarding the balance of public interest. The Council acknowledged that disclosing the information would enhance transparency and facilitate public debate on the project. However, it argued that this public interest was outweighed by the economic damage that could be done to the Council by releasing the financial information.

On this point, the Tribunal disagreed with the Council, and required the Council to disclose the information requested (subject to some redactions). The Tribunal found that the following factors were important in determining that the public interest lay in disclosing the financial information:

  • once data has been aggregated, as was the case here, a developer cannot secure any significant advantage from it;
  • the level of detail in the financial information to be disclosed would cause the council very limited disadvantage in negotiations;
  • the information had only just passed the first limb of commercial sensitivity – a more convincing case that that data was commercially sensitive would assist the argument that the public interest lay in non-disclosure;
  • there was a strong public interest in knowing the total costs the Council was likely to incur, and the return that the Council was likely to make, which would enhance debate on the Project; and
  • there was also strong public interest in giving enhanced transparency to the Council’s environmental activities.

What does this mean for suppliers to the public sector?

Although this judgment is heavily fact specific, it follows a trend in which it is becoming more difficult to rely on this exemption (see, for example, our article on another recent case regarding viability assessments here).

The Tribunal did allow some particularly commercially sensitive information to be redacted, but the redactions were quite limited. What was key, in this case, was showing that significant harm would be caused to the Council’s bargaining position by disclosing information. A strong argument that this is the case will go a long way to ensuring that the information is exempt from disclosure.

The decision also confirms that aggregated information will be more likely to be disclosed than non-aggregated information. Aggregated information is clearly less helpful to third parties, and for this reason it will be much more difficult to argue that it is in the public interest for it not to be disclosed.

Nevertheless, as a general rule, suppliers to the public sector should not simply assume that all economic or financial information given to local authorities will be kept confidential. Bearing this in mind when information is requested, for example during a tender process, can help to focus minds on what should or should not be provided, and what can be done to mitigate the risks of subsequent disclosure.