Case number: 120049

Whether the Department was justified in its decision to grant a request to which section 29 of the FOI Act applies, involving access to a record which includes details of the amount paid to ABC in respect of the [named] Analysis.

Review Application to the Information Commissioner under the Freedom of Information Acts 1997 & 2003

Background

On 10 January 2012, the Department received an FOI request for details of the amount of monies paid to, and names of, and a breakdown of the work undertaken in 2011 by external consultants, contractors, PR agencies, advisors and legal firms.

While processing the FOI request, the Department's decision maker identified a record which he thought may contain information which could be deemed to be "commercially sensitive" under Section 27 of the FOI Act. The information related to the amount paid to ABC in respect of the [named] Analysis and the decision maker formed the view that, notwithstanding any commercial sensitivity, it would be in the public interest under Section 27(3) of the FOI Act to release this information to the requester. As the decision maker was of the view that the information should be released under Section 27(3), the request was deemed to be one to which Section 29 of the FOI Act applied. Therefore, the Department proceeded to notify ABC of its right to make a submission if it did not agree that this information should be released.

On 30 January 2012, the Department received a submission from the applicant, on behalf of ABC, in which he said that he did not agree that the information should be released. The applicant said that release would inform ABC's competitors on information regarding testing procedures and pricing structures that should not be available to them in the normal course of business. On 16 February 2012, the Department wrote to the applicant with its decision in relation to the record. The Department said that it had decided to release the information as it was of the view that the public interest would, on balance, be better served by granting rather than refusing the request. On 23 February 2012, the applicant made an application to the Information Commissioner for a review of the Department's decision in relation to the release of this information.

I note that Ms Rachel Dunn, Investigator, wrote to the applicant on 8 November 2012 informing him of her preliminary view that the decision of the Department was justified in this case and inviting him to submit any further comments that he considered relevant to the review. The applicant indicated that he would not be issuing any further response, therefore I consider that the review should now be brought to a close by the issue of a formal, binding decision. In conducting this review, I have had regard to the submissions of the applicant (including those made to both the Department and this Office), and to those of the Department. I have also had regard to the provisions of the FOI Acts and to the content of the record at issue.

Scope of the Review

This review is concerned solely with the question of whether the Department was justified, in terms of the provisions of the FOI Act, in its decision to grant access to a record which contains information in relation to the amount paid by the Department to ABC in respect of work undertaken on the [named] Analysis in 2011.

Analysis and Findings

Under section 34(12)(a) of the FOI Act, a decision to grant a request to which section 29 applies is presumed to have been justified unless the person concerned shows to the Information Commissioner's satisfaction that the decision was not justified. This provision has the effect of placing the burden of proof on the applicant to show that the decision of the public body to release the records concerned is not justified. Following the notification process provided for in section 29 of the FOI Act, the Department decided that the record in question did contain commercially sensitive information under section 27(1)(b) of the FOI Act but that it would be in the public interest under section 27(3) to release this information. When the decision was referred to this Office for review, it was contended by the applicant that the record at issue was exempt from release pursuant to the provisions of sections 27(1)(b) and 27(1)(c) of the FOI Act and that it would not be in the public interest to release the information.

Applicability of Section 27
Sections 27(1)(b) and (c) of the FOI Act provide that a request shall be refused if "the record concerned contains -

(b) financial, commercial, scientific or technical or other 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, or

(c) information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates."

Section 27(1)(b)
Section 27(1)(b) protects 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/her profession or business or otherwise in his/her occupation.

The applicant said that the information in this record was commercially sensitive, it would not be made available to any other trading partner, and that its release would seriously impair ABC's ability to operate in this business sector. The information contained in this record is the total amount which was paid by the Department to ABC in respect of the [named] Analysis carried out in 2011. I accept that this information falls within the description of "financial or commercial". However, the essence of the test in section 27(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The subsection protects information whose disclosure might 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.

The Information Commissioner has concluded in similar cases that the only requirement which has to be met in these type of cases is that disclosure "could prejudice the competitive position" of the person concerned and that the standard of proof necessary to meet this test is considerably lower than the standard required to meet the test of "might reasonably be expected to." The record shows the amount paid to ABC in respect of the [named] Analysis carried out in 2011. The applicant said that release of this information would mean release of ABC's current pricing strategy and that such disclosure could reasonably be expected to result in material financial loss to it and could irreparably prejudice its competitive position in the conduct of this type of sample analysis business generally and in respect of a future tender competition for this contract. The applicant also said that specific details of the sampling levels and frequency and the list and numbers of samples carried out under the [named] Plan are publicly available in the Department's "[named plan] for Ireland for 2012" and that, when read in conjunction with the information in this record, competitors would be able to calculate the fee paid per sample. I agree that release of this information into the public domain would potentially enable competitors to calculate the fee ABC charged the Department per sample in 2011, and consequently the value of its contract with the Department so that there is a possibility that they could seek to undercut that rate in future competitions for similar work. Therefore I am satisfied that the record contains financial or commercially sensitive information and that section 27(1)(b) applies to this record.

Section 27(1)(c)
Section 27(1)(c) protects information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.

The applicant contended that release of the information would lead to details of ABC's current and preferential pricing strategy for the Department becoming public knowledge. As a consequence, competitors gaining this commercially sensitive information would be in a position to exactly match, or undercut, its current pricing strategies and thus prejudice the conduct and outcome of the Department's imminent tender competition for the [named] Analysis.

The Information Commissioner has previously accepted that the standard of proof required to meet this exemption is relatively low. Given that the applicant indicated that a tender competition was imminent and that competitors would be able to calculate the previous tender price (or fee paid per sample in 2011) when the information in this record is read in conjunction with other information which is publicly available in the "[named plan] for Ireland for 2012", I agree that the record contains information whose disclosure could possibly affect the conduct or outcome of a competition for a similar contract and that section 27(1)(c) applies to this record.

Section 27(3) - the Public Interest
The Long Title to the FOI Act declares that its purpose is "to enable members of the public to obtain access, to the greatest extent possible consistent with the public interest and the right to privacy, to information in the possession of public bodies . . . ". The underlying presumption of the FOI Act, therefore, is that access to information held by public bodies will be granted in the normal course, subject only to the exemptions as provided for in Part III of the FOI Act. A number of these exemptions (e.g. section 27) contain a provision whereby access to information may be granted in the public interest. Section 27(3) of the FOI Act requires that the "public interest" be considered when deciding whether to grant or refuse access to records which contain information of a financial or commercially sensitive nature (section 27(1)(b)) or information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations (section 27(1)(c)).

The Department identified the following public interest factors against release of the record in question: the public interest in protecting information given in confidence and commercially sensitive information; the public interest in ensuring that a person or company would not be unduly impeded in the effective pursuit of its business by disclosing commercially sensitive information; the public interest in allowing commercial state bodies operating in a very competitive industry the space they require to conduct their business in a confidential manner; the public interest in a person not being given access to documents which contain confidential and commercially sensitive information of another person or organisation; the public interest in protecting information where the organisation which owns the information does not consent to its release by the Department; and the public interest in protecting information given in confidence.

The Department identified the following public interest factors in favour of release of the record in question: the public interest in the requester exercising rights of access under the FOI Act; the public interest in enhancing the accountability of Government; the public interest in the operations of the Government and public bodies being transparent; the public interest in openness, transparency and accountability in the use of public funds; the public interest in the accountability of administrators and scrutiny of decision making processes; and the public interest in ensuring that government departments are accountable to the public for the use of public monies and the services they provide.

Financial or commercially sensitive information (within the meaning of section 27(1)) cannot be released under the FOI Act unless it is considered that the public interest is better served by doing so. The applicant mentioned that there are strong public interest factors militating against disclosure of commercially sensitive information generally and that this is reflected in sections 6(7) and 27 of the FOI Act and therefore recognised by law. The Information Commissioner has previously accepted that there is a legitimate public interest in persons being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result and it is this public interest which section 27(1) seeks to protect. However the FOI Act also recognises, both in its long title and in its individual provisions that there is a significant public interest in public bodies being open and accountable.

In attempting to strike the balance between openness on the one hand and the need to protect confidential and commercially sensitive information on the other, the Commissioner has previously indicated that she must consider the positive public interest which is served by disclosure and the harm that might be caused by disclosure. The positive public interest which would be served by disclosure of the price at which goods or services are supplied to a public body is the public interest in ensuring the maximum openness in relation to the use of public funds. Such openness is a significant aid to ensuring effective oversight of public expenditure, to ensuring the public obtains value for money, to preventing fraud and corruption and to preventing the waste or misuse of public funds.

This public interest in favour of disclosure has to be balanced against the harm which might be caused by disclosure. The applicant said that release of the record would lead to loss of competitiveness, provide his competitors with information regarding his current and preferential pricing strategy in respect of this contract and type of business generally, lead to loss of the key competitive edges the body has taken time, experience and resources to build up, and prejudice the conduct and/or outcome of the Department's imminent tender competition.

The previous Information Commissioner made a significant decision on the question of access to tender documents of bidders who were successful in a procurement competition undertaken by a public body (case no. 98049, available on this Office's website at www.oic.gov.ie). Although the applicant's case relates to payments which were made and not to tender documents, the principles are broadly the same, and in the 14 years since the above case was decided this Office has habitually found that records relating to payments made by public bodies to service providers are releasable. In case 98049, the previous Commissioner found that, by and large, such successful bidders were in receipt of a benefit from the State (the contract with the public body following the procurement process), and that therefore, even if release of information from their tender documents might cause commercial damage, the public interest in holding the relevant public body to account for its use of public resources would be better served by release of such documents than it would be by withholding them. Depending on the circumstances, certain parts of such documents could be properly exempted as the public interest would not be better served by release.

In relation to the applicant's view that the disclosure of the information would reveal ABC's current and preferential pricing structure and place it at a competitive disadvantage vis-à-vis other tenderers for a similar contract in the future, this issue has also previously arisen in Case 98049. In that case, the Information Commissioner referred to the relevance of the remarks of the Queensland Information Commissioner in the case of McPhillimy v Queensland Treasury (Decision No. 96011) where it was said that knowledge by future tenderers of the price quoted by an earlier successful tenderer does not automatically give them a significant advantage over the previously successful party. The following comment was made in response to a suggestion that knowledge of previous tender prices among prospective tenderers would damage the tender process by enabling tenderers to judge the likely range of prices.

"In essence, Mr Jones claims that knowledge of previous year's tender prices will enable a firm to make an informed judgement of the likely price range in a forthcoming tender so as to ensure that it does not quote significantly below that range. However, in my view, provided that market for the supply of security services to the Grand Prix event remains a competitive market, in which security firms do not know the details of their competitors' forthcoming tenders (i.e., provided there is no collusion in the market), one firm cannot with any certainty predict the behaviour of its competitors who have knowledge even of a previous year's tender prices. (I note that the GCMEC has not presented any evidence to suggest that such a competitive market does not exist, and further note that security firms not based at the Gold Coast have in the past been willing to tender for the provision of security services to the Grand Prix). One firm cannot exclude the possibility that one ore more competitors may be prepared to cut profit margins drastically and attempt to significantly undercut the previous year's range of tender prices in a bid to win such a high profile contract. "

The public interest factors which have been identified by both the applicant and the Department in favour of withholding the record at issue are based on arguments as to the harms which might arise as a result of its disclosure. However, given that the information in the record is historical and that future tenderers (in the absence of any collusion in the market) cannot predict the future behaviour of their competitors, I am not satisfied that such harms would be likely to arise. On the other hand, there is a strong public interest in scrutinising the Department's payments of public funds to third parties and ensuring that public bodies obtain the best possible value for money. Therefore, on balance, I am satisfied that the advantages in terms of openness and accountability of disclosing where and on what public funds have been spent, outweigh the possible harm to the competitive position of ABC and that the public interest is better served by release of the information in question. Accordingly, although I have concluded that sections 27(1)(b) and 27(1)(c) apply to this record, I am satisfied that section 27(3) also applies as the public interest would, on balance, be better served by the release of the record at issue in this case.

Decision

Having carried out a review under section 34(2) of the Freedom of Information Act 1997, as amended, I hereby affirm the decision of the Department in this case that section 27(3) applies and that this record should be released in the public interest.

Right of Appeal

A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such an appeal must be initiated not later than eight weeks from the date on which notice of the decision was given to the person bringing the appeal.

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Stephen Rafferty,
Senior Investigator
7 December 2012