Whether the Department was justified in refusing access to parts of a financial appraisal report for the National Broadband Intervention Strategy under sections 30(1)(a), 30 (1)(c), 35(1)(a), 36(1)(b) and 36(1)(c) of the FOI Act

11 June 2020

Background

On 17 July 2019, the applicant made an FOI request to the Department for the full “Financial Appraisal Report” prepared by KPMG which formed the basis for KPMG’s ownership report for the National Broadband Plan. On 30 August 2019, the Department granted access to some of the report and refused access to the remaining parts on the ground that they were exempt under sections 30(1)(a), 30(1)(c), 35(1)(a), 36(1)(b) and 36(1)(c) of the FOI Act. On 6 September 2019, the applicant applied for an internal review of the decision. The Department issued an internal review decision on 27 September 2019, in which it affirmed its original decision. On 1 October 2019, the applicant applied to this Office for a review of the Department's decision.

In conducting my review, I have had regard to the correspondence between the applicant and the Department as outlined above and to the correspondence between this Office and both parties, as well as the content of the record that was provided to this Office by the Department for the purposes of this review. During the review process, the Investigator consulted third parties and I have also taken their submissions into account.

Scope of this Review

During the review process, the Department released further information to the applicant. It published the majority of the report on its website with up-to-date redactions. The question for me is whether the information which remains withheld is exempt under sections 30(1)(a), 30 (1)(c), 35(1)(a), 36(1)(b) and 36(1)(c) of the FOI Act.

Preliminary Matters

Before considering the exemptions claimed, I wish to note the following points. First, my jurisdiction under section 22 of the FOI Act is to make a new decision, in light of the facts and circumstances as they apply on the date of the review. The Courts have endorsed this approach. Secondly, while I am required to give reasons for my decision under section 22(10) of the FOI Act, I am also required to take reasonable precautions to prevent disclosure of information in an exempt record, under section 25. This means that the extent to which I can describe the records and the level of detail I can discuss in my analysis are limited.

Analysis and Findings

Section 36(1) - Commercial Sensitivity

Section 36(1)(b) of the FOI Act provides that an FOI body shall refuse to grant an FOI request if the record concerned contains 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.

The harm test in the first part of section 36(1)(b) is that disclosure "could reasonably be expected to result in material loss or gain". This Office takes the view that the test to be applied is not concerned with the question of probabilities or possibilities but with whether the decision maker's expectation is reasonable. The harm test in the second part of section 36(1)(b) is that disclosure of the information "could prejudice the competitive position" of the person in the conduct of their business or profession. The standard of proof to be met here is considerably lower than the "could reasonably be expected" test in the first part of this exemption. However, this Office takes the view that, in invoking "prejudice", the damage which could occur must be specified with a reasonable degree of clarity.

Section 36(1)(c) of the FOI Act provides that an FOI body shall refuse to grant an FOI request 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 section 36(1)(c) is relatively low in the sense that the test is not whether prejudice or harm is certain to materialise but whether it might do so. Having said that, the Commissioner expects that a person seeking to rely on section 36(1)(c) 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 explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.

Section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than refusing the request (section 36(3) refers).

Submissions

The Department submits that disclosure of the commercial and technical information could result in material financial loss or gain and prejudice the competitive position of the company. In relation to the public interest, it says that factors in favour of non-disclosure include the public interest in not releasing information that could damage a third party’s competitive position and which would be of commercial advantages to their competitors.

During the review process, the Investigator obtained submissions from KPMG and National Broadband Ireland. KPMG submits that factors within the report will influence ongoing negotiations between NBI and its suppliers and releasing the information would prejudice NBI’s own commercial position. NBI submits that releasing the information could prejudice the conduct of its commercial negotiations as regards labour and material services with suppliers and may prevent it from securing the best value for money. It says that it is undertaking negotiations with over 20 suppliers. It also says that the data provides insights on pricing strategy, markets and profitability which are not normally available to competitors and the disclosure of which could prejudice its ability to compete for business.

The applicant submits that the ownership model adopted for the national broadband plan was a hugely important decision on a vital piece of national infrastructure and releasing the record is very much in the public interest. He says that release could not reasonably be expected to result in material loss or financial gain or prejudice the competitive position of the preferred bidder, given how dated the hypothetical figures in the report now are.

Analysis and Findings on section 36

The withheld information comprises relatively small amounts of detail around assumptions underlying issues such as pricing, average revenue and projections on finance and profit. The applicant queries whether the alleged harms would occur, given the age of the figures. NBI says that although the figures are out of date, they would provide insights into how the revenue model was constructed and that others, using up-to-date information, could reproduce the revenue model and thereby gain insight into NBI’s pricing strategy. I accept that some of the figures in the report are now out of date, but that access to some of the projections could allow the data to be updated and used by others for commercial purposes in this specialist field. Having regard to the content of the withheld information and the NBI’s submissions, I am satisfied that disclosing the information to the world at large could prejudice NBI’s competitive position, as it would not otherwise be available to competitors, who could use it to their advantage. I am also satisfied that disclosure could provide insights to others which could prejudice the competitiveness of NBI in negotiations with suppliers and therefore the conduct and outcome of such negotiations could be prejudiced as far as NBI is concerned. I find that sections 36(1)(b) and 36(1)(c) apply to the withheld information.

Section 36(2)

Section 36(2) provides for the release of information to which section 36(1) is found to apply in certain circumstances.  I am satisfied that none of the circumstances identified at section 36(2) arises in this case.

Section 36(3)

Section 36(3) of the FOI Act requires me to consider whether, on balance, the public interest would be better served by granting than by refusing the request.

On the one hand, section 36(1) itself reflects the public interest in protecting commercially sensitive information. I recognise that there is a legitimate public interest in entities being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result. On the other hand, the FOI Act recognises, both in its long title and in its individual provisions, that there is a significant public interest in government being open and accountable. Section 11(3) of the FOI Act provides that public bodies shall, in performing any function under the FOI Act, have regard to a number of matters, including the need to strengthen the accountability and improve the quality of decision-making of FOI bodies.

I take the approach that in attempting to strike the balance between openness on the one hand and the need to protect commercially sensitive information on the other, it is legitimate to consider two things: the positive public interest which is served by disclosure; and the harm that might be caused by disclosure. In relation to the harm which might be caused by disclosure, I have identified potential prejudices to NBI above. As a general principle, I do not believe that the FOI Act was designed as a means by which the operations of private enterprises were to be opened up to scrutiny. Set against that, I agree with the applicant that the ownership model adopted for the national broadband plan was an important decision on a piece of national infrastructure and there is a significant public interest in transparency around this. However, in the circumstances, I consider that the appropriate balance has been struck by the release of further information in the report and that the public interest would be better served by refusing the request for the remaining withheld information. In this regard, I note that while the redactions protect some of the details of assumptions, projections and modelling used for pricing, financing and other analyses, the published information allows the public to see the methodology underpinning the report and the type of information used as a basis for projections and estimates.

I consider that the bulk of the report now available reveals to a large extent the information and analysis available to the Department to support its decision-making in relation to the project. I find that the Department was justified in refusing access to the withheld information under sections 36(1)(b) and 36(1)(c) of the FOI Act.

Given this finding, I am not required to consider the exemptions claimed under sections 30(1)(a), 30(1)(c) or 35(1)(a) of the FOI Act.

Decision

Having carried out a review under section 22(2) of the FOI Act, I affirm the Department’s decision, under sections 36(1)(b) and 36(1)(c) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Elizabeth Dolan

Senior Investigator