Case 98197. Appeal for review of the decision of the Department of Public Enterprise to grant access to certain correspondence between the ESB and the Department concerning the ESB's role as regulator in the electricity industry - whether information given by a state company to a public body concerning the company's regulatory role can be information given in confidence - section 26(1)(a) - whether the fact that allegations have been made about a state company could prejudice competitive position or could reasonably be expected to result in a material financial loss to the state company - section 27(1)(b)

Case Summary

Facts

The ESB appealed the decision of the Department to grant access to certain correspondence between the ESB and the Department concerning the ESB's role as regulator in the electricity industry. Some of the correspondence referred in passing to the fact that allegations had been made about the ESB, and to plans to build a power station which since the creation of the records had come into the public domain. The ESB claimed that the information was given in confidence (s.26) and was commercially sensitive (s. 27).

Decision

The decision affirmed the decision of the Department to release the correspondence. The Commissioner commented that, as a general principle, correspondence regarding the regulatory role of a State company cannot be regarded as being given to a public body on the understanding that it will be treated as confidential. He did not accept that a State company which enjoyed the powers such as the kind conferred on the ESB by the Electricity Supply Act 1927, would refuse to deal with legitimate queries raised by the Department in relation to the exercise of those powers.

While the Commissioner accepted that a State company engaged in commercial activities in a competitive market is entitled to proper protection of commercial information given to a public body, he stated that it had not been explained to him how the fact that allegations had been made, or that there was a proposal to build a power station that was already in the public domain, could result in the harms envisaged in section 27.

Date of Decision: 13.12.2000

Our Reference: 98197

13.12.2000

The Secretary Electricity Supply Board

The Secretary Electricity Supply Board

I refer to your application for a review of the decision of the Department of Public Enterprise ("the Department") to grant access to certain records relating to the Electricity Supply Board (ESB).

Background

I have now completed my review of the Department's decision. In carrying out that review, I have had regard to the submissions you have made to my Office and the Department and I have examined the records and parts of records to which it was decided to grant access. Having examined the issues involved I have decided to conclude my review by way of a binding decision.

In summary my decision is to affirm the decision of the Department to grant access to the records or parts of records concerned.

Scope of Review

The records involved in the request consist of correspondence between the Department and the ESB. In order to avoid any confusion I attach the schedule of records supplied to the requester at the time of the initial decision. I note that records numbered 6 and 8 have been released by the Department to the requester. Therefore my review is concerned only with the question of access to the remaining records on that schedule.

The schedule may give the impression that the decision of the Department is to release the remaining records in full. However the Department considered that parts of some records did not come within the scope of the original request. It also considered that a reference to a proposed new power station in record 4 should be refused. I note that the Department clarified which records or parts of records it proposes to release in its letter to you of 4 December 1998 which included copies of all the relevant records.

Again, to avoid doubt, my review is concerned solely with the question of whether the decision of the Department to grant access to the parts of these records, so identified, was justified.

Findings

The letters involved in this case consist of correspondence between the ESB and the Department. While some of the correspondence is headed 'New Generation Capacity', it is clear that its main concern is the ESB's role as regulator in the electricity industry. Certainly, this is the main concern of the parts of the correspondence which the Department decided to release. Where these parts refer to a proposal by the ESB to build a gas fired power station, it seems to me that such references are incidental to the main issue of the ESB's role as regulator. All the letters were created between 24 April 1998 and 7 July 1998.

You have argued that all records should be exempt under sections 26 and 27(1)(a), (b) and (c) of the Freedom of Information Act. I will deal with each of these exemptions in turn.

I should also remind you that section 34(12) provides that a decision to grant a request to which section 29 applies shall be presumed to have been justified unless the third party concerned shows to my satisfaction that the decision was not justified. In the circumstances the onus rests with the ESB of satisfying me that the decision of the Department to release the records in this case was not justified.

Section 26 - Information obtained in confidence

I note that you have been supplied with a copy of the relevant sections of the FOI Act by the Department. As you will note, for section 26(1)(a) to apply it is necessary to show four things :

• that the information was given in confidence, and
• that the information was given on the understanding that it would be treated by the public body as confidential, and
• that the disclosure of the information would be likely to prejudice the giving to the body of further similar information from the same person or other persons in the future, and
• that it is of importance to the body that such further similar information should continue to be given to the body.

In order to meet the first two requirements of section 26(1)(a) there must be a mutual understanding that the information is to be treated in confidence. While you may claim that the information in the letters was given by you to the Department in confidence I do not accept that the Department itself either treated the information in a confidential manner or understood that such information was supplied in confidence. The content of most of the records refers to the ESB's regulatory function in the electricity industry. The Department has not indicated or stated that it treated this information as confidential and did not find that section 26 of the Act applied in considering release of the material requested.

As a general principle, correspondence regarding the regulatory role of a State company cannot, in my view, be regarded as being given to the public body on the understanding that it will be treated as confidential. I am also not satisfied that disclosure of such information would be likely to prejudice the giving to the public body of further similar information from the ESB or from other persons in the future. I find it inconceivable that a State company which enjoyed powers of the kind conferred on the ESB by section 37 of the Electricity (Supply) Act, 1927 would refuse to deal with queries legitimately raised by a Department in relation to the exercise of such powers.

The parts of records which refer to the ESB's proposal to build a power station may, at the time, have been treated as confidential. However given the passage of time and the fact that this proposal is now in the public domain I do not accept that it can now be said to be of a confidential nature.

I therefore find that section 26(1)(a) does not apply in this case.

In your submission to my Office you have put forward a number of arguments which I take to be related to section 26 of the Act.

You suggest that access to the records should be refused as they may prompt a legal case to be taken, that release of certain records would result in further FOI requests being made, that the text being released is out of context and that release would publicise allegations about ESB. I do not accept that the possible end use of the information sought in this case is a reason for refusing access to the information sought. The Act enables members of the public to obtain access "to the greatest extent possible..." to information in the possession of public bodies. Inevitably when records are released in isolation they may appear out of context. I would suggest that if this is a serious concern in this case that the requester be supplied with an accurate and more up to date assessment of the situation. I also do not accept that the prompting of further FOI requests is a reason to refuse access.

You have also pointed out that the Department has "both owner and policy roles with respect to ESB" and that it would be "irregular for information disclosed by management to a shareholder in a private company to be freely available to a competitor". You also suggested that release of references to board meetings is not in the public interest. As a general proposition, I accept that a State company engaged in commercial activities in a competitive market is entitled to proper protection of commercial information given to a Department and the release of which may damage the company. This protection is provided for in section 27 of the Act, the application of which I consider below.

Section 26(1)(b) of the Act provides that access shall be refused if disclosure would breach a duty of confidence owed by the Department to you by virtue of an agreement, an enactment or otherwise by law. I note that you have made no argument that this is the case in this instance. I am not satisfied that the information was imparted to the Department in circumstances imposing an equitable duty of confidence. In the circumstances, and bearing in mind the requirements of section 34(12) referred to above, I find that section 26(1)(b) does not apply.

Section 27 - Commercially sensitive information

In your submission you have presented a number of arguments that I take to be related to the protection of commercially sensitive information. You have suggested that the details concerning the proposal to build a power station and the release of allegations in records 1, 4 and 12 would damage the commercial position of the ESB.

Section 27 of the Act relates to the protection of three different classes of commercially sensitive information.

Section 27(1)(a) of the Act protects the trade secrets of the person concerned. I have considered the test of what constitutes a trade secret in previous decisions when I quoted Gowans J. in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967 v.r.373], as follows "An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one's trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his contemporaries; (5) the amount of effort or money expended by him in developing the information; (6) the ease of difficulty with which the information could be properly acquired or duplicated by others". Having applied the test of 'trade secret' to the information in the records and having regard to the requirements of section 34(12) I am not satisfied that the information constitutes a 'trade secret'.

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 or her profession or business or otherwise in his or her occupation.

I accept that some of the information on the future plans of the ESB could be said to be "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 disclosure. In relation to the proposal to build a power station disclosure has already occurred, i.e. this information is now in the public domain, and so section 27(1)(b) does not apply.

In relation to the remaining material and the allegations paraphrased in records 1, 4 and 12, it has not been explained to me how the fact that allegations are made could prejudice ESB's competitive position or could result in a financial loss to the ESB. While it might possibly result in unwelcome publicity for the ESB I do not accept that it could result in the harm envisaged in section 27(1)(b). Therefore, I am not satisfied that disclosure of the information in these letters could reasonably be expected to result in a material financial loss or gain to the ESB or could prejudice its competitive position.

Section 27(1)(c) provides that a head shall refuse to grant a request under section 7 if the record concerned contains-

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

The standard of proof required to meet this exemption is relatively low in the sense that the test is not whether harm is certain to materialise, but whether it might do so. Having said that, I would expect that a person seeking to rely on this exemption would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure. I would also expect such a person to be able to explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations. I note that you have made no argument that this is the case in this instance. In relation to the proposal to build a new power station disclosure has already occurred. In the circumstances, and having regard to the provisions of section 34(12), I am not satisfied that section 27(1)(c) applies.

Decision

Having completed my review under section 34(2) of the FOI Act, I affirm the decision of the Department to grant access to records or parts of records as outlined in their letter to the ESB of 4 December 1998.

A party to a review, or any other person affected by a decision of the 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 4 weeks from the date of this letter.

Yours sincerely

Information Commissioner