Case 99035

Request for access to communications between the Department and Shannon Development concerning Esat Telecom - whether confidential information - section 26(1)(a) - whether information is commercially sensitive - section 27(1)(b) - whether disclosure could prejudice the conduct or outcome of negotiations - section 27(1)(c)

Case Summary

Facts

The requester applied to the Department of Enterprise, Trade & Employment for access to records relating to communications to and from Shannon Development concerning Esat Telecom. The Department decided, inter alia, to refuse access to a number of records pursuant to the provisions of sections 26 and 27 of the FOI Act. The requester applied to the Commissioner for a review of the decision of the Department

Decision

The records at issue were communications between Esat and Shannon Development which were forwarded to the Department by Shannon Development in an effort to resolve a dispute which arose between the two parties concerning the provision of ducting in the Shannon Free Zone for telecommunications infrastructure development. Esat had asked the Department to intervene. The records disclose the details of the dispute between the parties and the initial, interim and final positions adopted by them. During the course of the review, Shannon Development advised that it had no objection to the release of the records. The Commissioner found that Shannon Development's position fatally undermined the Department's argument that the disclosure of the records would be likely to prejudice the giving to the Department of further similar information from Shannon Development in the future. He also considered the question of whether the disclosure of the records would be likely to prejudice the giving of similar information to Shannon Development in the future which, in turn, would prejudice the onward transmission of that information to the Department. He was not satisfied that such an outcome would be likely to occur given the nature of the information contained in the records and he found that section 26 did not apply.

The Commissioner also considered Esat's arguments that the release of the records would disclose details of its competitive strategy and confidential commercial negotiations and that public knowledge of its commercial strategy would undermine its negotiating position and competitiveness. The Commissioner noted that the only information about Esat which the records at issue revealed were its negotiating strategy, including details of its initial and interim negotiating positions, along with details of the final agreement with Shannon Development and that the terms of this final agreement were made available to certain other telecommunications service providers ( all competitors of Esat). He found that Esat's negotiating strategy in the present case would be of little or no relevance once the final outcome of the negotiations was known to its competitors and he considered that its disclosure could not benefit Esat's competitors in any way or disadvantage Esat in any future negotiations. He found that neither of sections 27(1)(b) or 27(1)(c) applied to the records.

Date of Decision: 06.06.2001

Our Reference: 99035

06.06.2001

Mr X

Dear Mr X

I refer to your application under the Freedom of Information Act ("the FOI Act") for a review of the decision of the Department of Enterprise, Trade and Employment ("the Department") relating to your request for access to records relating to communications to and from Shannon Development concerning Esat Telecom.

Background

I have now completed my review of the Department's decision. In carrying out that review I have had regard to

• your original correspondence with the Department,
• your letter of 25 January, 1999 to my Office,
• the Department's submission of 12 August, 1999,
• correspondence between Shannon Development and my Office and
• correspondence between Esat Telecom and my Office.

In response to your FOI request the Department located one file which contained 115 records concerning arrangements to install telecommunications infrastructure in the customs-free zone at Shannon and relating to providers of such infrastructure including East Telecom. I note that the Department provided you with a schedule of all records and that it numbered the records as part of the scheduling exercise. I have adopted that numbering system for the purpose of identifying records in this review. The Department initially decided to release 5 records ( numbers 101-104 and 108). Following discussions with my Office, it subsequently decided as follows:

Records to be released: 1-3, 8, 47-48, 49, 50, 51-54, 55, 58-59, 68, 74-75, 80, 81, 84, 85, 88, 101-104 and 108 (28 in total)

Records outside scope of request: 4, 65-67, 69-70, 72-73, 77-79, 89-91 and 92-100 (23 records in total)

Pre-Commencement records: 9-46 and 71 (39 records in total)

The Department continued to refuse access to the following records on the grounds that either section 26 or 27 or both exemptions apply:

Finally, the Department indicated that the following records were copies of records already decided upon as follows:

Record 76 - Copy of record 5 Record 86-87 - copy of record 82-83 Record 113-115 - copy of record 105-107 Record 109-112 - copy of record 101-104 (already released)

Scope of Review

I have examined the records which, according to the Department, are outside the scope of your request. As none of the records in question are "communications made to and replies received from Shannon Development concerning the company Esat", I am satisfied that they do not come within the scope of your request. I have also examined the records which the Department claims are copies of records already decided upon. I note that record number 115 is an annotated version of record number 107 and that the question of whether you have a right of access to this record must, therefore, be considered.

Accordingly, my review is concerned solely with the question of whether the Department is correct in refusing access to the records numbered 5, 6-7, 56-57, 60-64, 82-83, 105-107 and 115 on the basis that sections 26 and/or 27 apply and records numbered 9-46 and 71 on the basis that they were created prior to the commencement of the FOI Act.

Findings

Records created before 21 April, 1998

The FOI Act confers a right of access to records created after its commencement, i.e. 21 April, 1998. Under section (6)(5) the right of access is also conferred in respect of records created before 21 April, 1998 where such access is necessary or expedient in order to understand records created after that date, or where the records relate to personal information about the requester.

I have examined records 9-46 and 71 in this case which were all created before 21 April, 1998 and which clearly do not relate to personal information about you. Furthermore, I am not aware of any other records created after 21 April, 1998 in respect of which it could be said that access to the pre-commencement records is necessary or expedient in order to understand them and I note that you have not identified any such record created after that date. In the circumstances, I find that section 6(5) does not apply in this case and that the Department is entitled, therefore, to refuse access to records numbered 9-46 and 71.

Records created after 21 April, 1998

Before dealing with the specific claims to exemption in relation to these records, I will give some general background to their creation. In early 1998 Shannon Development was engaged in developing the telecommunications infrastructure of the Shannon Free Zone (SFZ). This development required the laying of new ducting to meet the needs of any telecommunications services providers who might wish to provide services to businesses located in the SFZ. Shannon Development's position was that this ducting should be installed in one excavation process and should be available for sale or lease to all interested service providers. In pursuit of this policy Shannon Development entered into collective discussions with a number of service providers, including Esat. A meeting was held with the service providers on 16 July 1998 at which Shannon Development explained its policy and sought the views of the service providers. It is clear that there were divergent views among the service providers, with at least one of them expressing the view that two excavations were possible. It is also clear that whatever arrangement was ultimately decided on had to take account of the legitimate interests of all interested service providers and, in particular, had to be such as not to exclude some providers. Subsequent to the meeting of 16 July, there were further discussions between Shannon Development and Esat in the course of which a serious difference of opinion emerged centred on the terms on which ducting laid by Esat might be made available to the other service providers. As a result Esat asked the Department of Enterprise, Trade and Employment to intervene. Eventually, agreement was reached between Shannon Development and Esat. The records at issue disclose the details of the dispute between the parties and the initial, interim and final positions adopted by them.

Section 26(1)(a)

Section 26(1)(a) of the FOI Act provides that certain information given to the public body in confidence is exempt. For section 26(1)(a) to apply, it is necessary for the Department to show four things, namely

• that the information was given in confidence,
• that the information was given on the understanding that it would be treated as confidential,
• 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.

The Department argues that the records at issue were given to it by Shannon Development in confidence for a specific and limited purpose, namely to resolve the dispute between Shannon Development and Esat, and that it accepted the records for the sole purpose of resolving the dispute and on the understanding that they should be treated as confidential. It further argues that in the event of a similar situation arising in the future whereby it is requested to intervene between Shannon Development and a third party, it is likely that Shannon Development would not supply this type of information, if those records were to be released on foot of an FOI request. The Department also claims that it is important that it is in a position to act as "honest broker" between an agency under its responsibility and a third party and that it is in the interests of all concerned, including the Department itself, that it is in a position to continue to receive such information and to act as a mediator to reach a resolution of difficulties between the two parties.

During the course of the review, Mr Rafferty of my Office contacted Shannon Development and explained that, in his view, and given that the difficulties between it and Esat were initially brought to the attention of the Department by Esat, Shannon Development appears to have willingly provided background material in defence of its position on the matter. He explained that even if he were to accept that the first two requirements of section 26(1)(a) have been met in this case, he found it difficult to accept that Shannon Development would refuse to forward information to the Department in order to defend its position if a situation arose in the future where a third party attempted to enlist the assistance of the Department in persuading Shannon Development to deal with that third party on its terms. In response, Shannon Development advised my Office that it has no objection to the release of the records at issue. It seems to me that Shannon Development's acceptance that these records can now be disclosed fatally undermines the Department's argument on this point since it is a clear indication that the third requirement of section 26(1)(a) is not met.

Mr Rafferty also contacted Esat on the matter. Esat indicated that it supports the Department's claim that Shannon Development would be reluctant to supply information of the type at issue in the future if its contents were to be made public. It argues that, even if making the information public were of no concern to the Department or to Shannon Development, third parties will be reluctant to supply correspondence of this nature in future for fear that they would be disclosed to competitors. It claims that such a development would lead to the Department's role being undermined both in terms of its capacity to act confidentially vis-à-vis third parties and as an honest broker between third parties and agencies under its responsibility.

I dealt with a similar argument in Case Number 98100 - Ms Fiona McHugh and the Department of Enterprise, Trade and Employment. I accepted that disclosure, in that case, would prejudice the giving to the Department of further similar information from a number of agencies ( including Shannon Development) in the future. I accepted this, not because I believed that any of the agencies would refuse to co-operate with the Department, but because the agencies can only supply the information to the Department if they have received it themselves and I decided that disclosure in that case would be likely to prejudice the giving of similar information to the agencies in the future. The question in the present case is whether disclosure would be likely to prejudice the giving of similar information to Shannon Development in the future, which, in turn, would prejudice the onward transmission of that information to the Department. I note that the "information" which Esat gave both to the Department and to Shannon Development is of a different kind altogether from the information at issue in Case Number 98100 referred to above. It is not information about Esat or its business but a series of proposals and demands made by Esat in the course of trying to reach a commercial agreement with Shannon Development. The reality is that the matters discussed in the records at issue were not the private concern of Esat nor even the sole business of Esat and Shannon Development. The other telecommunications service providers had a stake in what was going on. Had the initial proposal or any of the interim proposals made by Esat been accepted it is inconceivable that their substance would not have been made known to some or all of the other service providers. I am not satisfied that disclosure of material of this kind, given in these circumstances, would be likely to prejudice the giving of similar information to Shannon Development by persons wishing to reach similar agreements in the future. Nor am I satisfied that disclosure would have the result of deterring persons from trying to reach such agreements.

In the circumstances, I find that section 26(1)(a) does not apply. As this was the only exemption claimed in respect of records 60-64, I find that the Department was not justified in refusing access to these records.

Section 27(1)(b)

Section 27(1)(b) of the FOI Act 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. Section 27(2) of the Act provides that section 27(1) does not apply where the person to whom the information relates consents to access being granted to the requester. In the circumstances, as Shannon Development has already indicated that it has no objection to the release of the records at issue, I need only consider the arguments put forward by the Department and Esat as to how release of the records concerned could reasonably be expected to affect Esat in a manner provided for in section 27(1)(b).

Esat claims that details of its competitive strategy and confidential commercial negotiations will be disclosed if the information is made public and that public knowledge of its commercial strategy would undermine its negotiating position and competitiveness. The Department argues that release of records 5 and 6-7 could damage Esat's competitive position by revealing what Esat is prepared to offer and accept in such commercial agreements while release of record 105-107 would allow a competitor of Esat to know what Esat's commercial strategy is in dealing with bodies such as Shannon Development which could harm the competitive position of Esat. While both the Department and Esat refer to the latter's "commercial strategy" I should state for the sake of clarity that the only information about Esat which the records at issue reveal are its negotiating strategy, including details of its initial and interim negotiating positions, along with details of the final agreement with Shannon Development. I should also note that the terms of this final agreement have been made available to those other telecommunications service providers ( all competitors of Esat) who may wish to share the ducting now being provided in the SFZ.

I accept that this information could be said to be "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 harm identified by both Esat and the Department in this case is the damage which they say would be caused to Esat's competitive position if its competitors were to discover its negotiating strategy in dealing with a body such as Shannon Development, presumably as a result of competitors taking account of that strategy when formulating their own negotiating strategy in order to give them a competitive edge.

It seems to me that the disclosure of the ultimate agreement reached between Esat and Shannon Development could not result in this harm, simply because this information is already known to its competitors. As regards negotiating strategy and interim negotiation positions, a case could be made in many instances that the disclosure of such information ( which might include price information or the specification of goods or services to be provided) would be harmful to the interests of the person concerned. However, in the present case the issues which were at the heart of the negotiations concerned the terms and conditions under which Esat's competitors could use the ducting. The outcome of any future negotiations in which such matters might be relevant will be determined not just by the reaction of the party ( such as Shannon Development) seeking to develop its telecommunications infrastructure but by the reaction of the other telecommunications service providers as well. In such circumstances, Esat's negotiating strategy in the present case seems to me to be of little or no relevance once the final outcome of the negotiations is known to its competitors and I fail to see how its disclosure could benefit Esat's competitors in any way or disadvantage Esat in any future negotiations. In the circumstances, I find that section 27(1)(b) does not apply to these records.

Section 27(1)(c)

Section 27(1)(c) of the FOI Act protects information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates. Again, I need only consider the arguments put forward by the Department and Esat as to how release of the records concerned could reasonably be expected to affect Esat in a manner provided for in section 27(1)(c).

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 and to explain how exactly the disclosure could prejudice the conduct or outcome of such negotiations. Esat claims that public knowledge of its commercial strategy would undermine its negotiating position. The Department argues that release of records 6-7 could affect the future negotiating position of Esat as the record outlines what Esat is prepared to offer in such an agreement. While neither Esat or the Department have identified negotiations which are in train or reasonably foreseen which might be affected by disclosure, it is reasonable to assume that Esat is likely to be involved negotiations in the future concerning the provision of telecommunications infrastructure. However, as I have indicated above, I fail to see how release of the records at issue in this case could disadvantage Esat in any future negotiations. In the circumstances, I find that the provisions of section 27(1)(c) do not apply.

Public Interest

Although it is not strictly necessary for me to do so, I should say here that even if I were to have found that any of the provisions at section 27(1)(b) or 27(1)(c) did apply, I would have been obliged to consider whether, on balance, the public interest would be better served by granting rather than refusing to grant the request for access to the records in question. Commercially sensitive information (within the meaning of section 27(1)) cannot be released under the Act unless it is considered that the public interest is better served by doing so.

I accept 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 Act also recognises, both in its long title and in its individual provisions, that there is a significant public interest in the actions and business of public bodies being open to scrutiny. In my view, this public interest is of greater significance where the business being conducted involves transactions which may confer a benefit on a particular party to the detriment or exclusion of others, as is the case here. In the circumstances, I would have to be convinced (which I am not) that any damage to Esat which might be occasioned by release would be of such significance as to outweigh this public interest in disclosure. In my opinion, therefore, the public interest would be better served by granting rather than refusing to grant the request for access to the records at issue.

Decision

Having carried out a review under section 34(2) of the FOI Act I hereby annul the decision of the Department of Public Enterprise. I direct that access be granted in full to records numbered 5, 6, 7, 56, 57, 60, 61, 62, 63, 64, 82, 83, 105, 106, 107 and 115 (which is an annotated version of record 107).

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 four weeks from the date of this letter. You should note that effect cannot be given to this decision before the expiration of this four week time limit.

Yours sincerely

Information Commissioner