Witholding of “economically sensitive” or “commercially sensitive” information

Q: What is the legal basis for bodies such as EQC, CERA, Insurers etc. to be able to withhold information because it is “economically sensitive” or “commercially sensitive?” Is there a legislative basis for this? What does this phrase actually mean in legal terms?

A: The circumstances will basically be either because there is a contract preventing the release of such information or there is a legislation which permits its release.

EQC & CERA will, if they chose to do so, be able to rely on the exceptions in the OIA Act or it may be that they have entered into contracts which require them to keep certain information confidential.

Insurers will rely on contractual arrangements they have entered into or upon the general law which protects confidential information.

Section 9 of the Official Information Act is the most used piece of legislation to prevent the release of such information, it says:

Other reasons for withholding official information

(1)   Where this section applies, good reason for withholding official information exists, for the purpose of section 5 of this Act, unless, in the circumstances of the particular case, the withholding of that information is outweighed by other considerations which render it desirable, in the public interest, to make that information available.

(2)   Subject to sections 6, 7, 10, and 18 of this Act, this section applies if, and only if, the withholding of the information is necessary to –

(a)     …

(b)     Protect information where the making available of the information –

(i) Would disclose a trade secret; or

(ii) Would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information; or

(ba)   Protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information –

(i) Would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied; or

(ii) Would be likely otherwise to damage the public interest; or

(c)     …

(d)     Avoid prejudice to the substantial economic interests of New Zealand; or

…

(i)      Enable a Minister of the Crown or any Department or organisation holding the information to carry out, without prejudice or disadvantage, commercial activities; or

(j)      Enable a Minister of the Crown or any Department or organisation holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations);

As you can see there are quite a few situations where an agency could refuse to provide information because of its commercial sensitivity and in quite limited circumstances because of its economic significance.

There is also other legislation which can be used as a basis for withholding commercially sensitive information e.g. the Privacy Act.

In their guidelines to the Official Information Act the Ombudsmen say this about the meaning of commercial:

The first issue to consider is the meaning of “commercial”. The Ombudsmen are of the view that, in order to be “commercial”, activities must be undertaken for the purpose of making a profit.  This interpretation is based on:

  • Dictionary definitions of the word “commercial”, which refer to the conduct of commerce and trade for the purposes of profit and loss; and
  • Case law which has established that a profit motive is implied by the term “commercial” activities. For example, in Calgary (City) v Alberta (Assessment Appeal Board), the Court, citing other Canadian case law, stated that: “…whatever other attributes an activity may have it is not a commercial activity unless in addition it has as its predominant purpose the making of a profit.”

It is therefore considered that a profit motive is a pre-requisite for the conduct of “commercial” activities.

A distinction is recognised at law between financial motives and “commercial” motives. Prudent management of the financial position of an organisation does not establish that there is a “commercial” motivation.

The status of an organisation is not always relevant – for example, a charitable organisation may conduct activities in order to earn a profit, even though those profits are then applied for charitable purposes.

Here’s a link to the relevant part of the guidelines: http://www.ombudsmen.govt.nz/imagelibrary/100099.pdf

 

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