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Mr X and the Department of the Environment, Community and Local Government (FOI Act 2014)

Case Number: 160069


Whether the Department was justified in refusing access to the business plan submitted by Repak ELT with its application to become an approved operator under the Waste Management (Tyres and Waste Tyres) Regulations 2007

Conducted in accordance with section 22(2) of the FOI Act by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

 

Background

In a request dated 5 December 2015, the applicant sought access to certain records relating to the application of Repak ELT (Repak) to become an approved operator under the Waste Tyre Compliance Scheme, including a copy of the business plan submitted by Repak. The Department notified Repak of the request under section 38 of the FOI Act. In response, Repak stated that it had no objection to the release of the requested records with the exception of its business plan, which was attached as Appendix D to its application for approval under the Waste Management (Tyres and Waste Tyres) Regulations 2007. Repak's objection to the release of its business plan was on the basis that it had been expressly submitted to the Minister as "Confidential and Commercially Sensitive" and that it contained information such as strategy and financial data which, if disclosed, could prejudice the commercial interests of the company. Subsequently, in a decision dated 13 January 2016, the Department granted the applicant's request in part, but refused access to the business plan under section 35(1)(b) and section 36(1)(b) of the FOI Act.

On 12 February 2016, the applicant applied to this Office for a review of the Department's decision. Although the application for review was out of time, it was accepted by the Commissioner in the exercise of discretion, because the applicant had been misinformed by the Department regarding the right of review.

I have now completed my review in accordance with section 22(2) of the FOI Act. In carrying out my review, I have had regard to the submissions made by the applicant, the Department, and Repak as the affected third party in this case. I have also examined the contents of the record concerned. I have decided to conclude this review by way of a formal, binding decision.

Scope of the Review

This review is concerned solely with the question of whether the Department was justified in refusing access to the business plan submitted by Repak as Appendix D to its application to become an approved operator under the Waste Management (Tyres and Waste Tyres) Regulations 2007 ("the 2007 Regulations").

Preliminary Matters

Before setting out my findings, I should point out that while I am required by section 22(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement of section 25(3) that I take all reasonable precautions to prevent disclosure of information contained in an exempt record or matter that, if it were included in a record, would cause the record to be exempt. This constraint means that, in the present case, the extent of the reasons that I can give is limited.

In addition, I wish to explain my approach to the granting of access to parts of records. Section 2 of the FOI Act defines "record" as including part of anything that is a record. Section 18 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, I take the view that neither the definition of a record nor the provisions of section 18 envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, I am not in favour of the cutting or "dissecting" of records to such an extent.

Analysis and Findings

Section 22(12)(b) of the FOI Act provides that a decision to refuse to grant access to a record "shall be presumed not to have been justified unless the head concerned shows to the satisfaction of the Commissioner that the decision was justified."

Relevant Exemption Provisions
Section 35(1) states that "Subject to this section, a head shall refuse to grant an FOI request if-

(a) the record concerned contains information given to an FOI body, in confidence and on the understanding that it would be treated by it as confidential (including such information as aforesaid that a person was required by law, or could have been required by the body pursuant to law, to give to the body) and, in the opinion of the head, its disclosure would be likely to prejudice the giving to the body of further similar information from the same person or other persons and it is of importance to the body that such further similar information as aforesaid should continue to be given to the body, or (b) disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule) or otherwise by law".


The confidentiality exemption generally does not apply to a record prepared by a staff member of an FOI body or a service provider "unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than an FOI body or head or a director, or member of the staff of, an FOI body or of such a service provider" (section 35(2) refers). In addition, section 35(1)(a) does not apply if the public interest would, on balance, be better served by granting rather than by refusing to grant the request (section 35(3) refers).

Section 36 of the FOI Act provides protection for three different classes of commercially sensitive information as follows:

"36. (1) Subject to subsection (2), a head shall refuse to grant an FOI request if the record concerned contains-

a) trade secrets of a person other than the requester concerned,

b) 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, or

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

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

The applicant's position
In his application for review, the applicant argues that Repak has no commercial competitors and therefore there is no basis for concluding that disclosure could prejudice the company's competitive position. He also argues that there is a strong public interest in disclosure because Repak's approval as the scheme operator affects the entire Irish Tyre Industry and the financial details in its business plan "influence the increased costs that all buyers of tyres will have to pay". The applicant restates his arguments in his submission and also suggests that the knock-on effect from the increased costs of tyres will result in added costs to various sectors of the economy. He emphasises that there are "no competitive issues arising because there are no competitor schemes".

The Department's position
In its submission, the Department explains the background to the scheme concerned, which is referred to as the Tyres and Waste Tyres PRI scheme. [PRI apparently refers to "producer responsibility intiative".] Simply put, the purpose of the scheme is to improve compliance with the Tyre Regulations through the introduction of new measures for the management of waste tyres, including the formal introduction of a visible Environmental Management Charge (vEMC). The previous schemes, referred to as the Tyre Recovery Activity Compliance Scheme (TRACS) and Tyre Waste Management (TWM), failed to achieve any credible environmental gains because they did not fund or subsidise the collection and treatment of tyres or provide for specific recycling or recovery targets. The new regulatory regime is currently being implemented in two phases. Repak's approval under the 2007 Regulations is for phase one, which is merely transitional. Phase two, on the other hand, is intended to involve the "introduction of a full producer responsibility initiative for tyres under new Regulations". The Department explains: "Repak ELT will be required to submit a new application for approval for phase two and most of the information contained in the Business Plan relates to phase two." As there is nothing to prevent another body from seeking approval for phase two, the Department maintains that disclosure could indeed prejudice Repak's competitive position.

According to the Department, the information contained in the business plan is analogous to pricing information in a tender document. The Department describes the financial and strategic information contained in the plan and explains how a potential competitor, and in particular the tyre industry representative bodies which have expressed an interest in making their own application for approval, could use the information as a basis for such an application and thus harm Repak's competitive position. The Department also claims that the release of the information in the business plan could prejudice the conduct of Repak's negotiations with the waste collectors and recovery operators and could also impact on future negotiations between Repak and the Department.

In addition, the Department contends that the business plan is subject to a confidentiality agreement which prohibits the release of Repak's confidential and commercially sensitive information. This is in reference to Clause 13 of the approval document, which includes the following statement: "The Department shall endeavour to ensure that the confidentiality of specific records provided by Repak ELT to this Department is maintained consistent with our legislative obligations." The Department states that Repak provided the business plan to the Minister on the basis that it would be treated as confidential, because it was required to do so under section 26(2) of the 2007 Regulations. It says that the release of the information would be likely to prejudice the giving of further similar information by Repak when it makes its further application for approval later in the year.

In relation to the public interest, the Department explains that Repak has no control in the setting of the vEMC, as this power rests solely with the Minister. The Department adds: "Also this is not a new charge. Industry has long been charging a disposal fee to purchasers of new tyres. This full PRI scheme is simply formalising that charge to ensure it is properly used to treat waste tyres. There will be no increase in cost to the industry as it will be the purchaser who pays the charge. The fee of €2.80 for passenger car tyres has been in the public domain for some time."

The Department also highlights the benefits of a properly functioning tyre scheme, particularly in terms of ending the illegal dumping and stockpiling of tyres.

Repak's position

Repak supports the Department's decision to refuse access to its business plan. It emphasises that, when notified by the Department of the request, its only objection to release was in relation to the business plan; it did not, and does not, object to the release of any other information contained in its application for approval. It notes that, unlike the other appendices, the business plan is specifically marked as "confidential and commercially sensitive". It says that it therefore had the expectation that the business plan was being given, and received by the Department, in confidence. It gives a general description of the business plan as follows:
"It is the nature of the information in the business plan that it is inherently confidential. The business plan includes financial information strategy, and analysis of the Department's requirements, amongst other things. The preparation of the business plan, and the information contained in it, is the product of Repak's experience and knowhow in relation to compliance and the running of producer's responsibility initiatives in the recycling context, details of which Repak does not publicly disclose."

Elsewhere in its submission Repak describes the business plan in more detail, particularly in relation to its financial information strategy. In its view, the plan thus "identifies very tangibly the commercial harm which would arise should the business plan be released". Repak says that it regards the plan as including trade secrets.

Repak further states that, given the damage that could ensue from disclosure, it would not be in a position to produce a similarly detailed business plan in future. Repak refers to the confidentiality agreement providing for the protection of commercially sensitive information exchanged between itself and the Department and says that it was required in order for the company to have the "comfort" it needed regarding the protection of its confidential information. Repak also argues that it is important to the Department that further similar information should continue to be given to it:

"It is in the interest of the Department, and indeed the public at large, that any approval application process be as comprehensive an competitive as possible. Any impediment on the submission by Repak ELT (or other parties) of confidential information to the Department hinders that. Furthermore, an inability to exchange confidential information on an ongoing basis during the lifetime of an approval [would] also hinder the ongoing implementation of the scheme for which the operator is approved."

In addition to relying on the confidentiality agreement, Repak contends that an equitable duty of confidence exists in relation to the business plan. It notes that the detriment that would result from disclosure would include the release of its know-how, which would assist other persons wishing to apply for approval under waste tyre compliance schemes. Like the Department, Repak refers to the two phases of the new regulatory regime for waste tyres and the fact that a separate approval will be required for the second phase involving the introduction of a full producer responsibility initiative for tyres and waste tyres under new Regulations. Repak confirms that much of the information in its business plan relates to the second phase. It also says that it is possible for there to be other applications for approval in relation to the current phase of the waste tyre scheme.

Repak argues that the expected detriment would equate to a material financial loss. Repak also refers to the contentious nature of the waste tyre scheme within the tyre industry: "There has been, and continues to be, significant resistance from some elements within the tyre industry to the concept of a producer responsibility initiative model and the establishment of Repak ELT and there are others who would wish to compete with Repak ELT in relation to the scheme." In addition, Repak contends that the public interest would be better served by protecting the business plan because of the confidential and commercially sensitive information it contains. Repak stresses that its objection to release is confined to the business plan. It says that the remainder of the application for approval, the release of which it does not object to, satisfies the public interest in disclosure in relation to the application and approval process.

Conclusions
I note that the Department and Repak have presented strong claims of confidentiality with respect to the business plan. I confirm that each page of Appendix D of the application for approval which comprises the business plan is marked as "Confidential and Commercially Sensitive". While this Office does not accept that such labelling is necessarily sufficient to impose an obligation of confidence on an FOI body, it is noteworthy that Appendix D is the only part of the application where the precaution of using such labelling was taken. In other words, it is apparent that the "Confidential and Commercially Sensitive" marking was used in a specific and targeted manner. I also accept that it was reasonable for Repak to place some reliance on the confidentiality clause contained in the approval document in the circumstances.

I do not accept, however, that the confidentiality clause gives rise to a duty of confidence by agreement for the purposes of section 35(1)(b) of the FOI Act. The clause is merely is aspirational in nature, as is appropriate in light of the Department's obligations under FOI, the Access to Information on the Environment Regulations 2007 to 2014, and the Aarhus Convention, all of which the clause also refers to. In any event, as the strength of the confidentiality claims turns in essence on the perceived commercial sensitivity of the information contained in the business plan, I regard section 36(1) as the more appropriate exemption for consideration in this case.

Section 36(1)(a)
This Office accepts that a trade secret is information used in the trade or business which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret and that the owner must limit the dissemination of it or at least not encourage or permit wide-spread publication. This Office also accepts that an exact definition of a trade secret is not possible, but that the some factors that are considered relevant to the determination are as follows:

(1) the extent to which the information is known outside of the business concerned;
(2) the extent to which it is known by employees and others involved in the business;
(3) the extent of measures taken by the business to guard the secrecy of the information;
(4) the value of the information to the business and to its competitors;
(5) the amount of effort or money expended by the business in developing the information;
(6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

I note that the business plan provides a candid and detailed account of how the company intends to meet its long term strategic objectives and of the consequences in the event that these objectives are not met. However, while the plan reflects the company's know-how, which I accept would be of assistance to a potential competitor or to those seeking to undermine the PRI scheme, it seems to me that at least some of the information in the plan could be largely deduced by knowledgeable employees or others with a good understanding of the scheme and the tyre industry. In the circumstances, I am not satisfied that the information qualifies as trade secrets for the purposes of section 36(1)(a) of the Act.

Section 36(1)(b)
The harm test in the first part of subsection (1)(b) is whether disclosure of the information "could reasonably be expected to result in material financial loss or gain". The Commissioner takes the view that the test to be applied in this regard is not concerned with the question of probabilities or possibilities, but with whether the decision maker's expectation is reasonable. The only requirement which has to be met in the second part of section 36(1)(b) is that disclosure "could prejudice the competitive position" of the person concerned. The standard of proof necessary to meet this test is considerably lower than the standard required to meet the test of "could reasonably be expected to" in the first part of section 36(1)(b). All that is required is the possibility of prejudice.

Based on the submissions of the Department and more especially Repak, and having regard to the contents of the business plan, I accept that the record concerned contains financial information whose disclosure could reasonably be expected to result in a material financial loss to Repak or could prejudice the competitive position of Repak as the operator of the waste tyre scheme. As noted above, the business plan provides a candid and detailed account of how the company intends to meet its long term strategic objectives and of the consequences in the event that these objectives are not met. It reflects the company's know-how, which I accept would be of assistance to a potential competitor or to those seeking to undermine Repak's position as the scheme operator. The period covered by the plan confirms that it largely relates to phase two of the scheme, which, as explained above, will require a separate application for approval. The plan also provides details of the company's income and expenditure forecast, the disclosure of which could be harmful to its funding model. I am therefore satisfied that section 36(1)(b) applies.

Section 36(3)
On the matter of the public interest, I note that it is not disputed that there is a need for openness and accountability in relation to the approval process and the operation of the waste tyre scheme. However, the provisions of section 36 itself reflect the public interest in the protection of the commercially sensitive information. The business plan at issue here provides significant insight into the manner in which Repak intends to operate the current and future scheme, but it also reflects the company's know-how and reveals details of its financial forecast. The purpose of the public interest test is to strike a balance between competing interests insofar as they are relevant. As stated in previous decisions, the Commissioner takes the view that the FOI Act was designed to increase openness and accountability in the way in which public bodies conduct their operations; generally speaking, it was not designed as a means to open up the operations of private enterprises to scrutiny. I also consider that the public interest in openness and accountability has been served to some degree by the release of the remainder of Repak's application and the documents relating to its approval. Moreover, as noted by the Department, the vEMC rate of €2.80 was set by the Minister and is in the public domain. Accordingly, I find that, on balance, the public interest would be better served by refusing access to the business plan at issue.

Decision

Having carried out a review under section 34(2) of the FOI Act, I hereby affirm the decision of the Department in this case.

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