Submitted by Jim Amos, The Constitution
Unit, University College London
The focus of this submission is upon the impact
of the draft Bill on business. The following questions are addressed:
Why is the proposed Freedom of Information
Act (FOIA) important to business?
What evidence do we have from other
countries to help us form a judgement about the likely impact
What is the current position in the
UK in relation to the availability of government information that
is relevant to business?
What are the key questions that business
will have when considering the draft UK FOIA and how does the
draft Bill answer these questions?
What are the overall issues from
the perspective of business?
What do we expect the impact to be?
1. WHY IS
FOIA IMPORTANT TO
The prime purpose of FOIAs, and as it is expressed
in the UK White Paper, is to enable citizens to know more about
the work of government that is carried out on their behalf. More
open government should lead to better government. It is not directly
about business at all.
However, government, as a consequence of its
role in licensing, regulating, purchasing and supporting business
activities, holds a very great deal of information about business
and individual companies. Some of it is very sensitive and could
cause harm if it became known and available to competitors. For
example, research, product and market plans. Much of it could
be of value to companies to assist them in competing more effectively
for government contracts and in the market more widely. For example;
information about the market, including specific market studies;
information about contracts and future requirements; information
about policies likely to affect business.
A FOIA therefore provides business with new
risks and new opportunities. This is illustrated by the fact that
certainly in Canada and the USA, there is evidence that the largest
users of their FOIAs to request general government information
are business requesters.
2. WHAT EVIDENCE
The experience of business in Australia, Canada
and the USA seems most relevant, with the most detailed information
available about the USA. There is some evidence from within the
EU, where several countries have had access to information laws
for some time, but the evidence is very mixed and more limited.
The USA, in 1966, was the first country in recent
times to introduce an FOIA. Business became very concerned about
its effects, in particular the apparent risks that sensitive information
would be disclosed. There were some very high profile mistakes,
eg the release of details of the Monsanto herbicide, Roundup.
There was also some misinformation with a report that the design
of the space shuttle nose cone had been given to the Japanese.
This was untrue.
The lack of any provision in the 1966 Act for
business to be consulted before release of its information was
recognised as a serious problem. This led to the creation of what
became known as "reverse FOI" law suits. This is where
a submitter of information sues to prevent disclosure of his information.
This whole area was the subject of many cases and much controversy.
In the USA this matter was settled by an executive order in 1987
which required government departments to give notice to submitters
before disclosing their information.
The release of the unit prices of government
contracts was also for a long time an area of controversy. This
was settled in 1998 with an update of the Federal Acquisition
Regulations which required the items, quantities and any stated
prices of each award to be released, with no prior notice necessary.
From the legal perspective most focus has been
upon the issue of the protection of sensitive information. However
the other side of the story in the USA has been the growth of
specialist FOIA law firms, consultancies and marketing companies
who have developed businesses from the acquisition and marketing
of government information.
The position today is that there are no current
serious issues with FOIA so far as business is concerned. Departments
are considered to manage release competently, and increasing amounts
are published on the Web. There is a clear body of case law. Companies
know how to protect their sensitive information and the value
of looking for the information they need to assist their marketing.
Overall the view is that the effect upon business is at worst
neutral and probably positive.
Australia and Canada
Australia and Canada introduced their FOIAs
in 1982. They had both looked at the early experience of the USA
and wanted to avoid the problems they had seen. They both included
provisions for companies to be consulted before their information
was released. There was some initial business concern, but the
policy framework within which the Acts were implemented was protective
of commercial information. There was little business use in Australia
and initially in Canada. Information was protected effectively
and in both countries the view was that businesses that were well
established had much better access to the government information
they needed than the FOIA would provide.
In Canada recently there has been a growth in
business use. In 1994 43 per cent of all requests were known to
come from business, many in the area of drug licensing and other
licensing and trade mark areas together with information relating
to contracts. In Canada, contract details are increasingly being
published on the Web.
There is a contrast between the attitudes of
the Nordic countries towards freedom of information and most of
the others where traditions of state secrecy have been strongly
established. In Sweden, where the original access to information
law dates from 1766, the Government normally makes available details
of public contracts and these are routinely requested and used
by business. In The Netherlands and Germany the policy is to apply
the levels of openness required by EU procurement regulations.
An analysis of award notices published in the Official Journal
of the EC in 1998 showed that the UK provided information about
value for 33 per cent of the awards that were published. The EU
average was 60 per cent.
3. WHAT IS
THE UK IN
After a long history of blanket confidentiality
being applied to information about companies that was held by
government, there have recently been a number of changes towards
greater openness. This however has happened in a patchy and not
always predictable way.
It should be noted that a FOIA is being proposed
in the context where there are a number of separate current initiatives
that relate to government information. These may also have some
impact upon business. For example, the UK White Paper on Modernising
Government, the EU Green Paper on Public Sector Information in
the Information Society, the UK Green Paper Crown Copyright in
the Information Age, and the Treasury Paper, Selling Services
into Wider Markets. All these taken together, promote the better
use of public information to:
improve the quality of government.
make it easier for citizens and business
to relate to government.
generate growth and employment from
the value-added resale of public information.
generate more revenue for government
from the exploitation of its information assets.
Information is currently made available under
a framework of regulations and policy, some of which are initiated
by the EU and some by the UK government.
Examples of those that are of concern to business
are the regulations that cover procurement by public authorities,
the environment and health and safety.
EU procurement directives are implemented into
UK law by Treasury Regulations. In addition to specifying a framework
for public procurement, they require the publication of information
about public contracts including the price, and for losing tenderers
to be told the characteristics and relative advantages of the
tender selected as well as the name of the successful tenderer.
These regulations are not in practice very fully implemented and
confidentiality can be claimed relatively easily. This applies
across the EU as a whole.
EU Environmental and Health and Safety Directives
and Regulations have a broad scope and overlap to some degree.
Information to which any commercial or industrial confidentiality
attaches is protected. There is some use by business and some
revenue is earned by the Environment Agency from value-added use,
for example provision of information about environmental issues
within defined distances of proposed property developments. Enforcement
notices are made available and 54 registers of environmental information
The Health and Safety Executive receives a number
of requests each year that are clearly for business purposes.
An example is requests for the enforcement profiles of specific
companies. These come from law firms, legal departments and purchasing
departments. The assumption is that these requests relate to the
assessment of potential suppliers, finding information about competitors
and potential candidates for acquisition.
Code of Practice on Access to Government Information
This was first introduced in 1994 and revised
in 1997. It encouraged departments to make available a wide range
of information subject to a number of exemptions. The Ombudsman's
reports show clearly that in the early period it was mostly operated
in a restricted way. There have been some recent changes of policy
towards greater openness in some departments.
A good example is the press notice issued by
DETR in July 1998, which announced that in future all DETR contracts
would as far as possible be publicly available documents. Where
there were good reasons why, exceptionally, certain parts of contracts
should remain confidential, these would need to be negotiated
during the tendering process. We are not aware of any problems
or complaints about this change.
We understand that the Health and Safety Executive
now provide more information than previously as a result of the
impact of the Code of Practice. In the area of enforcement they
now provide a 200 word summary of the incident where previously
they would just have reported action under a particular clause.
The decision by MAFF from January 1998, to publish the Hygiene
Assessment System scores of individual slaughterhouses by name
was a very clear change of policy.
The Code of Practice has in effect provided
a framework within which a relatively open or restrictive regime
can be operated according to the policy the department adopts.
This has led to significantly greater openness in some areas and
far less change in others. We have seen that this applies with
FOIAs also. The administration of the FOI legislation in Australia
and Canada still varies across departments. There is very little
business use in Australia, but a growing use now in Canada where
most government contracts are channelled through a single purchasing
The UK, with the Code of Practice and some slow
pressure from EU Directives has in some areas become more open
than previously. In general the previous blanket confidentiality
applied to information about companies has broken down, but without
being replaced by a predictable and generally applied level of
openness. Business is operating in a gradually more open environment.
FOI could herald a step change that would force the subject onto
the agenda and cause more positive management of information given
to government and the fuller exploitation of information that
4. WHAT ARE
DRAFT UK FOIA, AND
(1) What classes of information will
departments and public authorities publish routinely as part of
their publication schemes?
For example, will they regularly publish details
of public contracts and if so in how much detail? Will they follow
the same policy as expressed in the revised Federal Acquisition
Regulations in the USA?
Clause 6 places a duty on every public authority
to adopt a publication scheme which has to be approved by the
Commissioner. We will have to wait and see how open or restrictive
these schemes are. The Home Secretary's code of practice must
also cover "the inclusion in contracts . . . of terms relating
to the disclosure of information."(clause 38(2)(d)).
(2) What commercial information will
departments disclose upon request?
How will they interpret the test that information
is exempt if its disclosure "would or would be likely to,
prejudice the commercial interests of any person?" Will departments
generally be willing to accept assertions from companies that
disclosure would prejudice their interests or will they require
evidence to support the claim?
Companies should plan on the basis that reasonable
evidence will be required to support a claim for exemption. What
level of evidence will become clearer as the decisions of the
Commissioner start to form a body of case law.
(3) Will public authorities consult
the business suppliers of information before they disclose it?
They will not be under a legal obligation to
do so but the code of practice to be drawn up by the Home Secretary
must include provision about this (clause 38(2)(c)). It would
be preferable if the Bill contained a statutory requirement of
advance notice and consultation, as in Australia and Canada.
(4) If a public authority intends to
disclose information which has been supplied by a company, does
the company have a right of appeal?
The answer is no. Requesters of information
have a right of appeal to the Information Commissioner but not
suppliers. As the draft Bill is written the only protection for
a company which disagrees with the decision of a public authority
to release its information is to apply for an injunction at common
law for breach of confidence. An injunction will only be granted
if disclosure would constitute an actionable breach of confidence.
It would be much cheaper and simpler if companies could appeal
to the Information Commissioner within a coherent legal framework,
based simply on the exemptions in the Bill.
(5) Could this Bill apply to information
that a company is providing to government now?
Yes, there is no cut off time. Clause 8 simply
refers to information "held" by the public authority
at the time of the request. The Bill is fully retrospective.
(6) What recourse would a company have
if its information is released by mistake and commercial harm
is caused as a result?
Clause 48 states that the Act "does not
confer any right of action in civil proceedings in respect of
any failure to comply with any duty imposed by . . . this Act."
However if disclosure would constitute an actionable breach of
confidence, the company may seek damages at common law.
Overall this draft Bill leaves many questions
unanswered in terms of its potential impact upon business. Many
of the key practical questions relating to the protection of sensitive
information are to be left to a code of practice which we have
not yet seen. There is no statutory right of advance notice to
business before disclosure of its information, and no right of
appeal against a decision to release information. Business would
feel a lot more comfortable with a FOIA if it had these statutory
5. WHAT ARE
The most compelling issue from the business
perspective when a FOIA is proposed in any country is concern
that secret and confidential information may be disclosed and
damage caused. All FOIAs address this concern and have provisions
to protect confidential information. However experience has shown
that whatever is stated in an Act a great deal will depend upon
interpretation, the consistency with which it is applied and the
scope for mistakes.
It is difficult at this stage to predict with
confidence what will and what will not become available as a result
of a FOIA. Business is as likely to be concerned about the predictability
of the new policy as it is about openness. What is predictable
in advance and applies equally to all players can be managed.
The process by which genuinely confidential
information can be protected as a legal right with a clear appeal
process is a priority. In the draft Bill the lack of a right to
advance notice and an appeal process creates a risk of a replay
of the problems and controversy that occurred in the USA which
led to development and extensive use of "reverse FOI"
suits. It would be preferable to business to provide for "reverse
FOI" procedures in the Bill rather than to rely upon the
chances of the law of confidence and High Court injunctions.
The risk of mistakes being made that cause damage
is a related concern. The emphasis given to the training of staff
and the quality and clarity of the FOI processes within government
are a way to allay this concern.
Once business is reasonably satisfied that the
risks are acceptable and controlled, then the opportunities to
exploit the information made available by FOIA will come higher
up the agenda. The scope for business to exploit public information
is considerable and well developed in the USA. A more open regime
offers more opportunities to business. These opportunities are
broadly in the field of marketing. They include finding out more
about the market both within and outside government, about specific
public sector needs, about relevant government policies and about
other players in the market.
6. WHAT DO
At present we do not know. There are some variables
that, if addressed, are likely to cause the impact to be positive.
Some of these relate to government and some to business.
Factors within the control of government:
a right to notice and an appeal process.
quality and clarity of FOI processes
within government as expressed in the code of practice and implemented
with consistency and predictability.
the publication schemes that are
Factors within the control of business:
the review and positive management
of information provided to government. The USA experience has
shown that with careful management, sensitive information can
be protected, even in an environment where there is some unpredictability
and risk of mistakes.
exploitation of the opportunities
to make use of the new information resources.
The position today is that the impact could
be problematic or positive depending upon how effectively these
factors are addressed.
The writer, after a career in the computing
and telecommunications industries, which included periods marketing
to the public sector, has been carrying out research on the subject
of freedom of information and business as a Visiting Fellow at
The Constitution Unit, School of Public Policy, University College
More detail of some of this work has just been
published by The Constitution Unit, with the title, Freedom of
Information and Business: The impact of a Freedom of Information
Act upon Business as suppliers of products and services to the