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Defensive trends
Since the implementation of the Freedom
of Information Act ('F'oIA' / 'the Act') in January 2005,
businesses are sometimes cautious about dealing with public
authorities due to the potential for information considered to be
'confidential' to be disclosed to a party making a request under
the Act.
Many contracts between businesses
sub-contracting to main public authority contractors will now
contain clauses such as the following:
"The [Contractor] will, wherever
possible, seek the [Sub-Contractor]'s prior approval before
responding to any requests for information and will, in any event,
disclose only the minimum required by law"
or:
"Where lawfully permitted, the receiving
party will make not respond to any third party disclosure requests
without first requesting instructions from the disclosing
party"
The inclusion of such clauses has been
regarded, quite rightly, as essential in many industries and
lawyers frequently find themselves trying to out-think potential
applicants under the Act in order to protect their clients'
information and interests (but at the same time avoiding
contracting out of the Act). The defensive response to the Act is,
therefore, clearly evident in modern drafting.
The opportunities
What the majority of businesses seem to
be missing out on, however, is the potential beneficial
opportunities FoIA could bring.
In exactly the same way that a business
might find itself the subject of a FoIA request for information, it
could itself make such a request regarding one of its competitors
or potential customers. Such a request could be a comparatively
cheap means of obtaining commercially helpful information, and an
efficient alternative to conducting expensive market research which
might not uncover the prize information being sought. It is quite
conceivable that all the following items, amongst other types of
information, could potentially be obtained from making a FoIA
request:
- the terms of an invitation to tender and
of the resulting contract
- whether a non-disclosure/confidentiality agreement has been
signed (some public authorities may be unwilling to sign such
agreements unless they are necessary and appropriate
- information about the application of regulatory regimes to
competitors which may provide arguments for modifications to the
rules being imposed on businesses subsequently dealing with such
authorities
- information relating to public contracts
(for example, performance/prices charged by existing suppliers).
This may assist a business either to make a bid which is more
likely to succeed or prevent that business from wasting resources
in bidding when there is little prospect of making a successful
bid, and
- information from the various regulatory
bodies regarding the enforcement profiles of potential suppliers,
to help assess the potential suppliers’ qualities as potential
suppliers or possible candidates for joint ventures or
acquisition
Examples of successful requests in recent
times
Hertfordshire County Council
(Case ref: FS50086121 Date: 1/2/07)
The complainant requested information
regarding private equity investments made by the council. The
council had refused to supply this information on the basis that in
doing so it would breach confidentiality agreements between it and
third party investment organisations. The complainant appealed to
the Information Commissioner.
The Commissioner stated that the
existence of a confidentiality clause, per se, should not mean that
a Council does not have to disclose the relevant information, as
this would mean that Councils would be able to contract out of the
Act. The Commissioner therefore looked behind the clause, to the
nature of the information concerned.
To have the quality of confidence (an in
accordance with the case of Coco v Clarke [1969] RPC 41), the
Commissioner found that the information must have been imparted in
circumstances to create an obligation of confidence, that the
information must not be trivial, and must not be readily available
by another means. The commissioner found that these elements were
sufficiently present for a duty of confidence to exist, but that
this was still subject to exceptions, such as public interest. The
Commissioner compared the public interest in disclosing the
information (that such transparency is important as the council is
investing public money), compared to that of not disclosing the
information (public knowledge of the funds in question may
detriment the fund's performance).
The Commissioner concluded that the
public interest in disclosure outweighed the public interest in non
disclosure because many other public bodies disclosed this type of
information with no or little adverse consequences.
Oxford City Council (Case Ref:
FS50090744 Date: 1/2/07)
The Complainant, a local newspaper,
requested details of the sale of land by the Council at a farm
which was subsequently developed for a football stadium and a
cinema. The Council refused to disclose certain information as
particular third parties has refused to give consent for the
disclosure – claiming that the confidentiality exclusion
applied.
The Commissioner found that as the
confidentiality clause in question was contained in a contract
entered into by the council, the document was not "obtained by the
public authority from any other person" and so section 41 did not
apply to the agreement. The Commissioner therefore followed the
decision in Derry City Council below.
The Commissioner then considered whether
disclosure of the information would constitute an actionable breach
of confidence, whether the information was worthy of protection and
whether its disclosure would have a detrimental impact on the
provider of the information. The Commissioner felt that
considerable time had elapsed since the sale of the land and that
value of the land in question had changed considerably in this
time. He also felt that the council had failed to persuade him that
the information was sufficiently confidential to justify
non-disclosure. Therefore, he could not see that there would be an
actionable case for breach of confidentiality in this case, and the
information should be disclosed to the complainant.
Derry City Council -v- The Information
Commissioner (Appeal Number EA/2006/0014
date11/12/2006)
In this well known case, Brian Hutton of
the Belfast Telegraph requested information relating to the
contractual arrangements behind Ryan Air's use of Derry
Airport.
The Council originally refused to
release any such information, however it later provided a copy of a
fax outlining the agreement but with specific details blacked out,
arguing that it was permitted to keep the specific details private
under exemptions contained in sections 29 and 42 of FoIA and on an
exemption relating to breach of confidence.
Ryan Air appealed the initial decision
of the Information Commissioner (which went in favour of Hutton)
and the Information Tribunal subsequently upheld the decision,
stating that the public interest of disclosure outweighed the
public interest of the economic interest of the area.
Taking advantage of the Act
The information flowing from the above
requests could no doubt be put to great commercial use by
competitors of the entity to which the information related. It can
be seen, therefore, that such an approach could bear rich fruit to
those hungry for a competitive advantage.
At present, only around 20% of FoIA
requests in the UK come from businesses, whereas in Canada that
figure is twice as high. Hence, it may be that in some other
jurisdictions more competitive advantage is being gained from the
use of freedom of information legislation than is happening here in
the UK.
The reluctance to use the Act as a
'sword' rather than a 'shield' may be explained by reasons such
as:
- businesses are reluctant to 'open
Pandora's Box' by making requests for information which might, in
turn, place them in the spotlight in terms of being on the
receiving end of such requests
- businesses are so focussed on getting the
defensive measures in place that they fail completely to notice the
potential advantages of a more opportunistic approach
- such requests are seen as 'unsporting' and
against the original spirit of FoIA legislation
One possible angle that could be
exploited by a business which has concerns belonging to the first
of the three groups identified above is the use of an intermediary
information requesting entity.
For example, 'Freedom of Information
Ltd' is a company which enables 'anonymous' requests for
information to be made. This is achieved through the company making
the request on behalf of its client – the party seeking the
information. This approach ensures that the identity of the party
desiring the information is concealed, as "Freedom of Information
Ltd" is the named applicant in the request received by the public
authority. This could prove a huge advantage to businesses which
are concerned not to appear to be publicly exploiting the Act for
commercial gain, as they would be able to do so in an anonymous
way, although the downside to this approach would be the fee
charged by the intermediary.
In today's increasingly competitive
market, many more businesses could be tempted to adopt the mantra
"attack is the best form of defence", meaning that in the years
ahead we could see a large increase in the number of businesses
taking advantage of this potential source of information. Such a
switch in culture would only serve to underline the importance of
ensuring that contracts with public bodies are drafted very
carefully.
Summary
In order for a business to obtain
information from a public authority, it should consider the
following steps:
- review the information held by public
authorities - consider which information, if any,
may be of interest
- decide on which areas to focus
- for example, a particular regulatory situation,
a new business venture, or a growing competitive threat from new
entrants with new technologies, and
- decide what information can actually be
obtained
Jimmy Desai is a partner in Blake
Lapthorn.
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