In this article we will explore the exemption to sharing information under the Freedom of Information Act – Section 43: commercially sensitive information.
This exemption, a guardian of commercial interests, is meticulously designed to prevent the disclosure of information that could potentially harm businesses. Here we will unravel Section 43 and understand its significance in fostering a conducive environment for business growth and innovation.
Contents
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What Does The Act Say?
Section 43 of the Freedom of Information Act reads:
“(1) Information is exempt information if it constitutes a trade secret.
(2) Information is exempt information if its disclosure under this Act would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it).
(3) The duty to confirm or deny does not arise if, or to the extent that, compliance with section 1(1)(a) would, or would be likely to, prejudice the interests mentioned in subsection (2).”
What Does This Mean?
Remember the Freedom of Information Act only applies to information held by or on behalf of public authorities. It does not apply to the wider private sector.
What is a Trade Secret?
The Act does not define a “trade secret”. The terms is defined, however, in the Trade Secrets (Enforcement) Regulations 2018. Based on these regulations the Information Commissioner understands a trade secret to be:
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secret, in the sense that it is not generally known among, or readily accessible to, people
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of commercial value, because it is secret. Its disclosure should also be liable to cause real (or significant) harm to the owner or give commercial advantage to another person
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subject to reasonable steps under the circumstances, taken by the owner, to keep it secret.
What Are Commercial Interests?
Both the providers and the buyers of products and services have commercial interests. For example when embarking on a tendering process a buyer will have a commercial interest in getting the best possible value from any contract.
That means when a request for information is received by a public authority they can take into account their commercial interests as much as any other party. So when considering a section 43 exemption there are two parts to the question:
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do we have a commercial interest here?
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does another party like a bidder or supplier have a commercial interest here?
Examples of Commercially Sensitive Information
Some things that may be considered commercially sensitive include:
Customer contacts: Details about a business’s customers, including names, addresses, and contact information, may fall under the protective umbrella of Section 43 (or other exemptions relating to personal data).
Business Plans: Documents outlining a public authority’s strategic roadmap to achieve its goals can be safeguarded against premature disclosure. This also protects decision making.
Pricing Information: Confidential details regarding a business’s prices for products or services may be shielded from the public eye in order to preserve the effective management of public funds.
What is Prejudice?
Prejudice means harm. When thinking about whether or not disclosure would (or would be likely to) prejudice commercial interests you need to think about:
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what is the harm that could be caused?
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the effect that would harm have?
What does “Would or Would be Likely To” Mean?
Effectively this means there has to be a real risk of the prejudice (or harm) happening. It has to be more than hypothetical. However, the risk does not have to extremely likely or even very likely for the exemption to apply.
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The Public Interest Test
While Section 43 provides a shield for businesses, it’s important to be clear that it’s not absolute. This exemption is an example of a public interest exemption. That means the decision of whether or not to withhold the requested information depends on the public interest test.
It is also important to remember that disclosure under freedom of information is to the world at large. You may not take into account the requestor’s identity when making your decision.
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learn more about other public interest exemptions here.
Public Interest Test Conditions for a Section 43 Exemption
For a section 43 exemption to be applied, and the information withheld, a number of conditions must be considered:
Information Holding: the public authority must possess the requested information.
Commercial Purpose: The information must be held for commercial purposes.
Impact on Commercial Interests: What could be the potential fallout on the commercial interests of the business or the public authority if the information is disclosed?
Protective Measures: What steps has the business taken to safeguard the information?
Reasonable Withholding: It must be reasonable, under the circumstances, to withhold the information. Public authorities must be able to explain their reasons to the people who request the information.
If a public authority decides not to disclose requested information under section 43 it must be able to explain the basis for relying on the exemption. Simply saying the information is commercially sensitive is not enough.
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get more detail about the public interest test and how it works here.
Section 43: Commercially Sensitive Information In Practice
To grasp the practical implications of Section 43, let’s explore scenarios where its application might be justified:
Getting Best Price
A public authority might want to ensure it gets the best possible price for a product. Therefore it could refuse to share what it currently pays for that product, because if that is released publicly cheaper suppliers may raise their prices. The public interest argument here is that getting best value for public money outweighs the public interest in disclosure.
The Tendering Process
Bidders for a contract may ask for a copy of the winning bid the last time the contract was tendered. However, releasing this may cause commercial harm to the previous contract winner because it will reveal commercially sensitive information about that company. The prejudice to that company outweighs the interest in putting the information in the public domain. Also it could affect the tendering organisation’s ability to get distinct and different bids.
In both cases the decision to withhold information hinges on the delicate balance between transparency and safeguarding commercial interests.
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Conclusion: Key Takeaways from Section 43 – Commercially Sensitive Information
Section 43 of the Freedom of Information Act is not merely a legal provision; it’s a strategic instrument shaping the contours of business transparency. As businesses navigate the complexities of innovation and competition, Section 43 stands as a guardian, ensuring a judicious balance between the public’s right to know and the imperative to protect commercial interests. In understanding its nuances, we unlock a deeper appreciation for the symbiotic relationship between transparency and business fortitude.