Commercial or industrial information (regulation 12(5)(e))

Latest updates - last updated 21 August 2023

21 August 2023 - We have added the Keeping internal consultations on FOI requests timely and transparent resource to the Further reading section.

About this detailed guidance

This guidance discusses regulation 12(5)(e) of the EIR in detail and is written for use by public authorities. Read it if you have questions not answered in The Guide to the Environmental Information Regulations or if you need a deeper understanding to help you apply regulation 12(5)(e) in practice.

In detail

• What does the EIR say?
• What are the general principles of the exception?
• How do we determine if the information is commercial or industrial in nature?
• How do we establish if confidentiality is provided by law?
• How do we consider if the confidentiality is protecting a legitimate economic interest?
• How do we establish if the confidentiality is adversely affected by disclosure?
• How do we apply the public interest test?
• What should we consider if the information is a trade secret?
• Practical points

What does the EIR say?

Regulation 12(5)(e) states a public authority may refuse to disclose information to the extent that its disclosure would adversely affect the confidentiality of commercial or industrial information where such confidentiality is provided by law to protect a legitimate economic interest.

All EIR exceptions are subject to the public interest test set out in regulation 12(1)(b). A public authority can only withhold information if the public interest in maintaining the exception outweighs the public interest in disclosing the information.

Regulation 12(2) specifically states that a public authority shall apply a presumption in favour of disclosure.

Regulation 12(9) provides that the exception is not available for information on emissions.

What are the general principles of the exception?

The purpose of the exception is to protect any legitimate economic interests underlying commercial confidentiality.

The exception can be broken down into a four-stage test. All four elements are required in order for the exception to be engaged:

• The information is commercial or industrial in nature.
• Confidentiality is provided by law.
• The confidentiality is protecting a legitimate economic interest.
• The confidentiality would be adversely affected by disclosure.

This was adopted by the Tribunal in Bristol City Council v Information Commissioner and Portland and Brunswick Squares Association (EA/2010/0012, 24 May 2010).

There is no direct equivalent in the Freedom of Information Act 2000 (FOIA). It incorporates elements of both section 41 (information provided in confidence) and section 43 (commercial interests) of FOIA. But it differs in some key respects and you should take care before applying the same arguments. In particular, it is not enough simply to argue that disclosure would adversely affect your commercial interests or those of a third party. You must also demonstrate that there is confidentiality provided by law, which may turn on some of the same factors relevant to section 41 but it is not an identical test.

If the information attracts specific intellectual property rights, you should consider the intellectual property exception in regulation 12(5)(c). It is likely to be more appropriate and you should consider that first.

The exception does not allow you to neither confirm nor deny (NCND) whether you hold relevant information. Under the EIR, you can only refuse to confirm or deny whether you hold information if to do so would:

• adversely affect the interests in regulation 12(5)(a) (international relations, defence, national security of public safety); and
• not be in the public interest.

The EIR differ in this respect from FOIA, where most exemptions include NCND provisions.

How do we determine if the information is commercial or industrial in nature?

For information to be commercial in nature, it needs to relate to a commercial activity, either yours or a third party. The essence of commerce is trade. A commercial activity generally involves the sale or purchase of goods or services, usually for profit. Not all financial information is necessarily commercial information. In particular, information about your revenue or resources is not generally commercial information, unless the particular income stream comes from a charge for goods or services. Examples include:

• Planning: information about development plans for land.
• Private Finance Initiative (PFI) or public/ private partnerships (PPP): information about a private business partner involved in the financing or delivery of public projects and services.
• Procurement: information about the purchase of goods or services from private contractors, including information submitted during the tendering process by bidders, information about the resulting contract, and information about your own purchasing position.
• Customer information: information about your customer base if the you charge for offering a particular service.
• Regulatory information: information obtained about private businesses in order to perform your regulatory functions, eg issuing licences or investigating breaches of regulations.

“Industrial” is generally understood to describe the processing of raw materials and the manufacture of goods in factories, as opposed to their sale or purchase. Examples include:

• information about methods of manufacture;
• raw ingredients or precise recipes; and
• the formula used for making a product.

How do we establish if confidentiality is provided by law?

It includes confidentiality imposed on any person by the common law of confidence, contractual obligation, or statute.

In contrast to section 41 of FOIA, there is no need for you to have obtained the information from another.

It covers information obtained from a third party, information jointly created or agreed with a third party.

It also covers information that you create. For purely internal information, you need to decide whether employees are under an obligation of confidence imposed by the common law, contract, or statute.

The exception protects confidentiality owed to you by a third party, as well as confidentiality you owe a third party. This was explicitly confirmed in by the tribunal in South Gloucestershire Council v Information Commissioner and Bovis Homes (EA/2009/0032, 20 October 2009).

Common law of confidence

There are two key issues you need to consider:

• Does the information have the necessary quality of confidence? If the information is not trivial nor in the public domain, it has the necessary quality of confidence. If you have shared the information with a limited number of people then it may still keep its quality of confidence, as long as you have not disseminated it to the general public. Even if it is all in the public domain, it is still possible for information to keep its quality of confidence, if it would take time and effort to find and collate it from multiple sources.
• Was the information shared (or provided to employees) in circumstances creating an obligation of confidence? This can be explicit or implied, and may depend on:
  • the nature of the information itself;
  • the relationship between the parties; and
  • any previous or standard practice regarding the status of information.
• A useful test is to consider whether a reasonable person in the place of the recipient would have considered that the information has been provided to them in confidence.

 

You may explicitly accept information in confidence but also refer to the fact that you might still have to disclose it under the EIR (ie if the other elements of the exception or the public interest test are not met). This type of warning does not undermine the fact that there is still an explicit obligation of confidence for these purposes.

In contrast to section 41 of FOIA, there is no need to consider whether there would be an unauthorised disclosure to the detriment of the confider. This is because there is no need to establish an actionable breach of confidence for the purposes of this exception. It is sufficient that there is a theoretical duty of confidence provided by law. However, the element of detriment still needs to be considered in the third stage of the test, which is discussed below.

There is also no need to consider whether there would be a public interest defence to any breach of confidence (unlike section 41 of the FOIA). Again, this is because there is no need to establish an actionable breach. It would be unnecessary duplication, as the exception is subject to the public interest test, when you will fully consider it before reaching any decision on disclosure.

Contractual obligations of confidence

We recognise that confidentiality clauses may be appropriate, if they help to identify information that would genuinely cause damage to the contractor’s interests if released. If you can establish that there is a binding confidentiality clause covering the requested information, you may argue that confidentiality is provided by law for the purposes of this exception.

You should still ensure that the information has the necessary quality of confidence, as you would do if you are considering a common law duty of confidence. If there is no quality of confidence, the exception will not apply in any event as it will not be possible to satisfy the other elements of the exception.

If in exceptional circumstances it is appropriate to agree to a confidentiality clause, you should ensure that there is good reason for doing so and that contractors understand that disclosure might still be necessary under the EIR. You might want to consider explaining the effect of the EIR in tendering documentation so it is clear from the outset. Giving this type of warning that you may override confidentiality in some cases, does not undermine the fact that confidentiality is still provided by law. Therefore, it does not affect your ability to use the exception.

However, a binding confidentiality clause does not allow you or any other public authority to contract out of your or their obligations under the EIR by inserting or accepting broadly drafted confidentiality clauses. Confidentiality is just one element and it is not enough on its own to justify withholding information. You still need to demonstrate that:

• the information is commercial or industrial in nature;
• the confidentiality is protecting a legitimate economic interest; and
• the public interest in maintaining the confidentiality in the particular circumstances of the case outweigh the public interest in disclosure.

Signing clauses that provide a false sense of security will only damage relationships if you are obliged to disclose information under the EIR at a later date. If the information is not inherently sensitive, a confidentiality clause will not protect it from disclosure under the EIR.

If the confidentiality is self-imposed by contract, this may affect the weight you give to maintaining the exception when conducting the public interest test. See ‘How do we apply the public interest test?’ section below.

Statutory bars on disclosure

Regulation 5(6) disapplies any statutory bars on disclosure for environmental information. This means that a statutory bar is not in itself a justification for withholding information under the EIR.

However, a statutory bar does mean that confidentiality is provided by law for the purposes of this exception. You may therefore be able to refuse the information under 12(5)(e), but only if you can satisfy the other elements of four-stage test, and the public interest test.

You should also be aware of the Public Sector Contract Regulations 2015 (PCR). As explained in the ICO’s guidance on Outsourcing and freedom of information, the PCR do not create a statutory prohibition on disclosure. Nevertheless, the fact that a contractor has identified information which they consider to be confidential could be of relevance to your consideration of exemptions.

How do we consider if the confidentiality is protecting a legitimate economic interest?

The confidentiality must be “provided… to protect a legitimate economic interest”. The Tribunal confirmed in Elmbridge Borough Council v Information Commissioner and Gladedale Group Ltd (EA/2010/0106, 4 January 2011) that, to satisfy this element of the test, disclosure of the confidential information would have to adversely affect a legitimate economic interest of the person the confidentiality is designed to protect.

Disclosure would cause harm

You need to consider the sensitivity of the information at the date of the request and the nature of harm that would be caused by disclosure. The timing of the request and whether the commercial information is still current are likely to be key factors. Broader arguments that the confidentiality provision was originally intended to protect legitimate economic interests at the time it was imposed will not be sufficient if disclosure would not actually impact on those interests at the time of the request.

It is not enough that disclosure might cause some harm to an economic interest. You need to establish that disclosure would cause harm (on the balance of probabilities – ie more probable than not).

This approach is supported by European Directive 2003/4/EC on public access to environmental information. The EIR are intended to implement the provisions of the Directive. Article 4 paragraph 2 of the Directive sets out a duty to interpret exceptions in a restrictive way. Taking into account this duty, the wording “where such confidentiality is provided by law to protect a legitimate economic interest” (as opposed to “where such confidentiality was provided…”) indicates that the confidentiality of this information must be objectively required at the time of the request.

In addition, the implementation guide for the Aarhus Convention (on which the European Directive and ultimately the EIR were based) gives the following guidance on legitimate economic interests: 

“Determine harm. Legitimate economic interest also implies that the exception may be invoked only if disclosure would significantly damage the interest in question and assist its competitors.” (emphasis added)

This interpretation is also more consistent with the general scheme of the EIR 12(5) exceptions, which require that “disclosure would adversely affect” the relevant interests identified in each exception (emphasis added). Unlike FOIA, there is no lesser test of “would be likely to adversely affect”.

 

Legitimate economic interests

Examples are:

• retaining or improving market position;
• ensuring competitors do not gain access to commercial valuable information;
• protecting a commercial bargaining position in the context of existing or future negotiations;
• avoiding commercially significant reputation damage; and
• avoiding disclosures which would otherwise result in a loss of revenue or income.

Some of the arguments may be similar to those made under section 43 of FOIA. However, economic interests are wider than commercial interests, and can also include financial interests. For example, arguments that disclosure would adversely affect your finances or tax revenue may be relevant to this element of the exception, even if we would not accept that this constituted a commercial interest.

However, you should remember that the information itself must still be commercial or industrial in nature, even if the interests at stake are not commercial interests.

It does not include:

• personal privacy concerns; or
• illegitimate economic interests (eg the proceeds of illegal activity or market position achieved by anti-competitive practices, such as price fixing or a cartel).

Whose interests?

For purely internal information, it is your interests that are relevant here.

If the information was provided by one party to another under the common law of confidence, it is the interests of the confider (the person providing the information) that are relevant.

If the information was originally provided by party A to party B, and then provided by party B to you under the common law of confidence, it is plausible that disclosure would also affect A’s interests. However, only B’s interests as the confider are relevant to the exception, unless you can establish that A also provided the information to either B or to you in confidence (ie that a separate duty of confidence exists to protect A’s interests).

If the information was jointly agreed or was provided under a contractual obligation of confidence or is protected by a statutory bar, either party’s interests could be relevant, depending on whose interests the confidentiality is designed to protect.

If a third party’s interests are at stake you need to consult with them, unless you have prior knowledge of their views. It is not sufficient for you to speculate about potential harm to a third party’s interests without some evidence that the arguments genuinely reflect the concerns of a third party. This principle was established by the tribunal in Derry City Council v Information Commissioner (EA/2006/0014, 11 December 2006). That case considered commercial interests under section 43 of the FOIA, but it is equally applicable to third party interests under regulation 12(5)(e).

If information is accepted in confidence, it is helpful if you understand from the outset why the contractor considers information to be commercially sensitive, and how long it is likely to remain sensitive.  However, you may still need to consult to obtain appropriate arguments and evidence at the time of a request. This is especially the case if circumstances have changed or market conditions have moved on, so that information might be less sensitive than when it was originally provided.

As paragraph 44 of the EIR code of practice makes clear, consultation with a third party is no excuse for delay. Therefore, you must still respond to the request within 20 working days.

Although you should consider the views of the third party, it is still your responsibility to decide whether or not the exception applies. You can only withhold information if you are satisfied that the third party’s arguments for withholding the information are justified.

If the information you are considering for disclosure relates to a large number of third parties, it may be appropriate to contact a representative organisation, or a sample of organisations who can express views.

There may occasionally be situations where it is genuinely not possible to obtain the views of a third party. For example, the time constraints for responding to a request may, for particular reasons, make consultation impossible.  In these specific circumstances, you may present arguments about the commercial interests of the third party, but they must be based on your prior knowledge of the third party’s concerns. You need to provide evidence that your arguments genuinely reflect the concerns of that third party.

Where consultation with a third party establishes that it does not have any concerns about disclosure and its commercial interests, you should not present speculative arguments on behalf of that third party or otherwise seek to apply this exception.

How do we establish if the confidentiality is adversely affected by disclosure?

Although this is a necessary element of the exception, once the first three elements are established, we consider it is inevitable that this element will be satisfied. Disclosure of truly confidential information into the public domain would inevitably harm the confidential nature of that information, and would also harm the legitimate economic interests that you have already identified.

 

How do we apply the public interest test?

You should consider both the specific harm that disclosure would cause to the relevant economic interest at stake, and whether there is any wider public interest in preserving the principle of confidentiality. However, the initial focus should be on the harm to legitimate economic interests.

If more than one EIR exception applies to the information, it is possible for you to aggregate the public interest factors relevant to each exception when considering the public interest test.

These factors must be balanced against the public interest in disclosure. You are reminded that regulation 12(2) specifically provides that you apply a presumption in favour of disclosure. This means that there will be occasions when you should disclose information even though it is confidential and disclosure would harm someone’s legitimate economic interests.

Harm to legitimate economic interests

Only harm to the economic interests you have already identified to engage the exception are relevant here. This is because the exception only protects confidentiality as far as necessary to protect those interests. You should not take any other arguments into account (eg relating to personal privacy or the interests of another party).

The weight given to this factor depends on the extent, severity and frequency of the harm in a particular case.

Preserving the principle of confidentiality

There is always some inherent public interest in maintaining commercial confidences. Third parties would be discouraged from confiding in you if they did not have some assurances that confidences would be respected.

However, we do not consider that a generic argument about inherent public interest carries significant weight.

Arguments about undermining confidentiality and the relationship of trust have more weight when they relate to the specific circumstances of the case and identify how that particular relationship serves the public interest. If you can demonstrate that this disclosure would undermine your relationship with a particular party, or affect your ability to do similar business with others in future, and that those relationships serve the public interest, then this will carry more weight that an assertion that breaching confidentiality will have a harmful effect on trust generally.

However, the weight of this argument again depends on the actual harm that the disclosure would cause to the third party. If the harm caused would be limited, it is more difficult to argue that this would seriously undermine your future relationships.

It may also depend on whether there are other methods of obtaining the information. If you can easily compel the disclosure of similar information in the future, or it is in the third party’s interests to continue to provide the information, there will be less public interest in preserving the principle of confidentiality.

 

However, this argument still may carry weight if it would take additional time and resources to compel the disclosure of information. This is especially the case if ensuring the free flow of information is important for your functions.

The weight of this wider public interest in respecting confidentiality may also be affected by the nature of the obligation of confidence. For example, if a duty of confidence has been voluntarily self-imposed on you by contract, this is likely to carry less weight than an obligation of confidence imposed by statute. Paragraphs 46 to 53 of the code of practice issued under the EIR make clear that you cannot contract out of your obligations under the EIR and should not accept information in confidence unless it is necessary to do so.

In terms of respect for confidentiality, for you, this itself is likely to carry little or no inherent weight. It may be important to preserve trust in your ability to keep third party information confidential. However, you should expect that information you create may need to be disclosed under the EIR, even if you would prefer to keep it confidential. In such cases the public interest arguments should be focussed on the specific harm to legitimate economic interests, rather than on respect for confidentiality in principle.

Public interest in disclosure

There is always some public interest in disclosure to promote:

• transparency and accountability;
• greater public awareness and understanding of environmental matters;
• a free exchange of views; and
• more effective participation in environmental decision making.

All ultimately contribute to a better environment.

This exception often arises in relation to planning matters. We consider that the particular public interest in public participation in planning matters is likely to carry a significant weight in favour of disclosure in such cases.

 

There are other factors in favour of disclosure, depending on the particular circumstances of the case. For example:

• accountability for spending public money;
• the number of people affected by a proposal;
• any reasonable suspicion of wrongdoing; or
• any potential conflict is interest.

 

What should we consider if the information is a trade secret?

Taking account of The Trade Secrets (Enforcement, etc) Regulations 2018, the ICO considers a trade secret is a form of confidential commercial or industrial information given additional protection under the common law. In broad terms, it refers to information that:

• is unique and often technical in nature, which has taken some degree of skill or investment to produce;
• gives a competitive advantage to the person using it; and
• is treated as particularly confidential by its owner (eg restricted to a limited number of people within an organisation).

A classic trade secret might be unique information about processes or methodologies (eg secret formulae or recipes). However, the concept is wider than this and could also include such things as unique financial models or pricing structures, customer lists, or promotional strategies, as long as these are not generally known and confer a competitive advantage.

Trade secrets are not specifically mentioned in the exception. Whether information technically constitutes a trade secret is not therefore a determining factor in applying the exception, as long as you can establish each element of the four-stage test set out above is met. We do not therefore advise you to focus on the concept at any great length for the purposes of this exception.

Nonetheless, if it is clear that information does constitute a trade secret, the exception is engaged. This is because it is an inherent feature of a trade secret that:

• it is commercial or industrial information;
• it is confidential; and
• disclosure would cause significant harm to the trading position of the relevant party (and therefore their legitimate economic interests).

If the information is a trade secret, there is strong public interest in protecting it. This is because of the level of investment involved and the extent to which disclosure would undermine the relevant party’s competitive advantage. This principle was confirmed by the tribunal in Department for Work and Pensions v Information Commissioner (EA/2010/0073, 20 September 2010). Even so, this does not mean that there is an actual blanket exception for trade secrets. It is of course still necessary for you to consider the weight of public interest factors in favour of disclosure in the particular case.

Practical points

Publication scheme

We expect you to routinely provide certain information about contracts that have completed a tendering process. See our publication scheme guidance for more information.