Good decision on non-disclosure of confidential information in public procurement, despite use of Freedom of Information Act

Helen Prandy of Procurement Portal has blogged about an interesting case regarding the always difficult balance between transparency and the protection of confidential information / business secrets in a public procurement environment. These are issues that have popped up repeatedly in the commentary of the Public Contracts Regulations 2015 (PCR2015) [see eg regs.21, 53, 55, 79, 83, 84, 86108, 112] and have significant practical relevance.

The case is Sally Ballan v Information Commissioner EA/2015/0021, where the First Tier Tribunal, General Regulatory Chamber (Information Rights) (FTT) decided against the appellant and confirmed the previous Information Commissioner (ICO)'s decision not to allow disclosure of a successful bid in a procurement process for the delivery of a “Leisure Management System”. This is interesting because the claim for access to information was not based on public procurement rules, but on the possibility of filing 'freedom of information requests' under the Freedom of Information Act 2000 (FOIA). In her post 'Commercial Interests: where does the balance lie under FOIA?', Helen Prady offers more background.

From a procurement transparency perspective, it is interesting to highlight the interpretation of s.43(2) FOIA upheld by the FTT, which allows public authorities to deny disclosure under an information request on the basis that the '[i]nformation is exempt ... 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)'. 

This is functionally very close to the possibilities foreseen under public procurement rules to withhold information where its release would prejudice the legitimate commercial interests of a particular economic operator, whether public or private. Even if s.43(2) FOIA does not include an explicit reference to disclosure of information that 'might prejudice fair competition between economic operators' (as public procurement rules do), it should be stressed that the interpretation and construction of this section of the FOIA is broad, and that it must encompass those sort of considerations under the public interest test [as further developed by Paul Gibbons of FOIMan here].  

Indeed, in the interpretation of s.43(2) FOIA by the FTT in Sally Ballan v Information Commissioner, this is particularly clear in paras [25(c), emphasis added] and [29], whereby
The ICO sets out factors tending towards public interest in not disclosing the information as: (c) There is a public interest in maintaining an efficient competitive market for leisure management systems. If the commercial secrets of one market entity were revealed, its competitive position would be eroded and the whole market would be less competitive. As the Court of Appeal put it in Veolia ES Nottinghamshire Ltd v Nottinghamshire County Council and others [2012] P.T.S.R. 185 at [111], a company’s confidential information is often “the life blood of an enterprise”. The ICO argued that this is particularly so in an industry such as the provision of leisure management systems because such systems are a complex amalgam of technologies, customer support networks, and user interfaces, which involve elements individual to particular companies. Those individual elements drive competition to the benefit of public authorities and consumers.

In terms of factors tending towards public interest in not disclosing the information, we accept and adopt all points made by the ICO in paragraph 25 above. An additional factor would include an interest in not disclosing any information to the extent that it contained trade secrets of the relevant tenderers.
Remarkably, the approach followed by the FTT under s.43(2) FOIA is convergent with that recently stressed by the General Court in European Dynamics Luxembourg and Others v Commission, T-536/11, EU:T:2015:476 (see here), which seems to indicate a clear trend towards a rationalisation of the transparency requirements in a public procurement setting in the right direction. For further discussion of the arguments in favour of such limitation of transparency in the public procurement setting, see A Sanchez-Graells, The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives (University of Leicester School of Law Research Paper No. 13-11, 2013).