Section 21 - Disclosure harmful to business interests of a third party

Overview

Section 21 is a mandatory exception to the public's right of access to information. It protects information which, if disclosed, would harm a third party's business interests.

Section Reference

Section 21 of the Freedom of Information and Protection of Privacy Act

21 (1) The head of a public body must refuse to disclose to an applicant information

(a) that would reveal

(i) trade secrets of a third party, or

(ii) commercial, financial, labour relations, scientific or technical information of or about a third party,

(b) that is supplied, implicitly or explicitly, in confidence, and

(c) the disclosure of which could reasonably be expected to

(i) harm significantly the competitive position or interfere significantly with the negotiating position of the third party,

(ii) result in similar information no longer being supplied to the public body when it is in the public interest that similar information continue to be supplied,

(iii) result in undue financial loss or gain to any person or organization, or

(iv) reveal information supplied to, or the report of, an arbitrator, mediator, labour relations officer or other person or body appointed to resolve or inquire into a labour relations dispute.

(2) The head of a public body must refuse to disclose to an applicant information that was obtained on a tax return or gathered for the purpose of determining tax liability or collecting a tax.

(3) Subsections (1) and (2) do not apply if

(a) the third party consents to the disclosure, or

(b) the information is in a record that is in the custody or control of the archives of the government of British Columbia or the archives of a public body and that has been in existence for 50 or more years.

Summary

Subsection 21(1) is a mandatory exception to the public's right of access to information. It protects information that, if disclosed, would harm a third party business interests.

Paragraphs 21(1)(a) to (c) provide a three-part test; that is, the information in question must meet all parts of the following test before a public body may apply the exception.

• The information would reveal third party trade secrets, or, the commercial, financial, labour relations, scientific or technical information of a third party, or about a third party;

• The information was supplied in confidence; and

• Disclosure of the information could result in one or more specified harms.

Many of the third parties contemplated for protection by subsection 21(1) will be commercial interests that have supplied information about private sector enterprises to government. However, the exception is not limited to information supplied by commercial third parties - it applies equally to information supplied by any individual or organization that meets each part of the three-part test.

Section 21 addresses information about the business interests of a third party where that information is held by a public body. Section 21 protects the information from disclosure where all three parts of the test are met, whether the third party whose business interests may be affected supplied the information or some other party supplied it.

Subsection 21(2) creates a mandatory exception to the public's right of access where the information in question was obtained on a tax return or gathered for the purpose of determining tax liability or collecting a tax. This applies both to personal and business information.

Subsection 21(2) operates as a mandatory exception independently of subsection 21(1).

The head cannot refuse to disclose information under subsection 21(1) or (2) where the third party consents to the disclosure under subsection 21(3).

Because this exception concerns the information of third parties, public bodies may apply it only in conjunction with the third party notice provisions in section 23 and section 24.

Policy

1. Public bodies must apply the section 21(1) exception when all three parts of the test in 21(1)(a) to (c) are met.

2. Whenever collecting information, public bodies should have documented policies and procedures in place to protect the confidentiality of information if there is an expectation that information supplied by the third party will be in confidence.

3. Information generated by public bodies from which third party confidential information can be inferred shall be subject to the same policies as information directly supplied in confidence by the third party.

4. Public bodies must apply the section 21(2) exception to any information related to taxation as noted in the section, in order to protect third party information supplied to the public body for taxation purposes.

5. Public bodies must not apply this exception if the third party consents to the release of the information, or if the record has been in existence for 50 years and is in the British Columbia Archives or the archives of a public body.

Procedure

1. Determine the age of the record. If the record has been in existence for 50 or more years and is in the custody or control of the British Columbia Archives or the archives of a public body, then this exception does not apply. See Calculation of Time.

2. Preliminary Examination
   
   Business information may exist in an aggregate form relating to several third parties. In such cases, information may be withheld under section 21 if it can be linked to a particular third party and meet the three part test. In determining whether aggregate business information may harm a particular third party consider:

• the number of firms that comprise the industry; and,
• the market share distribution among the firms.

3. Third Party Notice
   
   If the initial review indicates that part or all of the requested information may fall under this exception and the head intends to refuse access, the head may give notice to the third party, but is not required to do so. However, where the head intends to give access, the head must give the third party a notice pursuant to section 23.
   
   The notice to the third party must not identify the applicant, unless the applicant has given express consent to make this disclosure.

4. Line by Line Review
   
   To meet the three part test of section 21(1):

(a) the third party must have ownership or claim of legal right to the information and the information must be of the type described in 21(1) (e.g., information about the third party's finances, proprietary processes or approaches, labour negotiations, scientific or technical information, etc.); and,

(b) the information must have been supplied implicitly or explicitly in confidence; and,

(c) there are objective grounds for believing that one of the types of information listed in (a) will potentially or actually cause harm following disclosure.

Under paragraph 21(1)(c), some of the factors which may influence the head's decision include:

• the representations of the third party;
• the nature of the information and the type of harm its release might cause; and,
• the monetary or other value of the harm, if it can be determined to meet the definition of significant "harm".

A public body must be able to present detailed and convincing evidence of the facts that led to the expectation that harm would occur if the information were disclosed. There must be a link between the disclosure of specific information and the harm that is expected from release.

It is not necessary to demonstrate that actual harm will result, or that actual harm resulted from a similar disclosure in the past, although such past experience could be part of the factual considerations upon which the expectation of harm is based.

Under paragraph 21(1)(c)(ii), the head should consider all relevant facts, circumstances and third party representations to determine whether it is in the public interest that the supply of similar information continue and whether disclosure would discourage third parties from voluntarily supplying information to public bodies in the future. It is unlikely that similar information would no longer be supplied where there is a financial or other incentive to continue supplying that information (e.g., the public body purchases the information), where it is legally required, or where it is supplied under a contract where no breach of contract is expected or reasonably foreseeable.

5. Consideration of Third Party Consent or Representations
   
   The third party has 20 days after notice is given to consent to the release of the record or to make written representations against disclosure of the record in whole or in part. If the third party consents to the release of information, that information cannot be withheld under this exception. If the public body receives consent to the release of the information from the third party, check to see if another exception applies. If not, recommend to the head that the information be released.
   
   If the third party makes written representations that part or all of the requested record should not be released, consider those representations when determining whether to withhold the information under this exception. In addition, consider and document all other facts and circumstances when deciding whether to withhold part or all of the requested record under this exception.
   
   The third party's representations may or may not affect the finding of fact as to whether part or all of the requested record must be withheld under this exception.

6. Notice to applicant and third party following the head's decision

7. Severance

Interpretation

Interpretation Note 1 (Section 21(1)):

Section 21(1) applies to all organizations, including commercial and not-for-profit entities.

Must refuse to disclose

"Information"

Interpretation Note 2 (Section 21(1)(a)):   

That would reveal

"Reveal"

"Trade secret" - In order to be considered a trade secret, the information must meet all the standards established in Schedule 1. Information that is generally available through public sources such as an annual report or other publication would not qualify as a trade secret under the Act.

Example:

• The specifications for a piece of specialized lab equipment developed by the research and development section of a private company, and not known to the public, would have commercial value and the specifications disclosure could reasonably be expected to result in improper benefit to a competitor. This information meets the definition of trade secret.

"Of or about a "Third Party"

"Of a third party” implies that third party information has been supplied by that third party itself, “About a third party” implies that another party supplied the information, not the third party itself.

Commercial, financial, labour relations, scientific or technical information

"Commercial information"

Examples:

• Information which demonstrates the lowest price a third party could charge for a product and still receive a profit.
• Marketing plans, including market research surveys.
• Customer lists.
• Syndicated polls marketed by a commercial polling company.

"Financial information"

Examples:

• Financial forecasts
• Profit and loss statements

"Labour relations"

"Scientific information"

"Technical information" 

 Interpretation Note 3 (Section 21(1)(b)):

Supplied, implicitly or explicitly, in confidence

"Supplied"

Example:

• Observations recorded by a health, building or other inspector do not constitute information supplied, implicitly or explicitly, in confidence.

"Implicitly"

Example:

• A memorandum from an officer of the public body to a director refers, to a proposal from a private company on details of an unpatented trade secret, in a manner which would allow a competitor of the company to infer details of the trade secret.

"Explicitly"

Example:

• A public body holds a record which is a proposal from a private company and which includes specific details of an unpatented trade secret. The company provided the proposal on the written invitation of an officer of the public body. The company requested that the information be kept confidential. The facts and circumstances of the case and the representations of the company, all make it clear that the company regards the information as confidential and that the release of this information could reasonably be expected to result in undue financial loss to the company.

"In Confidence"

Interpretation Note 4 (Section 21(1)(c)):

"Disclosure of which could reasonably be expected to"

Interpretation Note 5 (Section 21(1)(c)(i)):

Harm significantly the competitive position or interfere significantly with the negotiating position of the third party

"Harm"

 "Competitive position" means the information in question must be capable of use by an existing or potential business competitor, whether or not that competitor currently competes for the same market share.

Examples:

• Information that discloses the profit margin on a private company's operations. 
• Marketing plans, including market research surveys, polls. 
• Information which reveals the internal workings of a private company.

"Interfere"

"Negotiating position"

Example:

• A document which discloses the lowest price a company will pay in the acquisition of assets, during a negotiation for the purchase of those assets.

Interpretation Note 6 (Section 21(1)(c)(ii)):

Result in similar information no longer being supplied to the public body when it is in the public interest that similar information continue to be supplied

"Result in similar information no longer being supplied to the public body" means that the third party would no longer supply to the public body information which is similar to the type requested by the applicant if the information in question were disclosed. The public body considers whether disclosure would discourage either the third party concerned or other third parties from voluntarily supplying information to the public body or other public bodies, in the future.

It is unlikely that similar information would no longer be supplied where there is a financial or other incentive to continue supplying that information (e.g., the public body purchases the information), where it is legally required or where it is supplied under a contract where no breach of contract is expected or reasonably foreseeable.

"When it is in the public interest that similar information continue to be supplied". The head is required to determine whether it is in the public interest that the third party, or other third parties, continue to supply similar information. In making this determination, the head considers all relevant facts, circumstances and third party representations.

Example:

• A company voluntarily submits sensitive business information to a public body The information keeps the public body informed about any of the company's activities which may have a detrimental effect on the environment. Competitors of the company would be able to use the information to unfair advantage. It is clear that the company would not supply the information to the public body in the future, if the information were disclosed to an applicant. It is also clear that it is in the public interest that the public body acquire the information in order to monitor industrial impact on the environment.

Interpretation Note 7 (Section 21(1)(c)(iii)):

Result in undue financial loss or gain to any person or organization

"Undue financial loss or gain"

Interpretation Note 8 (Section 21(1)(c)(iv)):

Reveal information supplied to, or the report of, an arbitrator, mediator, labour relations officer or other person or body appointed to resolve or inquire into a labour relations dispute

The release of information explicitly "reveals" the report of an arbitrator or other person if it alone is this type of information, or it makes direct reference to the report of an arbitrator or other person.

The release of information implicitly "reveals" the report of an arbitrator or other person if it allows a reader to draw an accurate inference about the substance of the report.

An "arbitrator" is a private, disinterested person, chosen by the parties to a dispute, for the purpose of hearing their contention and giving judgement between them, to whose decision (award) the litigants submit themselves either voluntarily or, in some cases, compulsorily.

"Mediator"

A "labour relations officer" is any person appointed to inquire into or resolve any form of labour relations dispute or issue.

"Other person or body appointed to resolve or inquire into a labour relations dispute". The appointment can be from any level of government or a public body (e.g., ministerial appointments, Cabinet appointments or appointments from the chief executive officer of a public body).

Interpretation Note 9 (Section 21(2)):

Information that was obtained on a tax return or gathered for the purpose of determining tax liability or collecting a tax.

Information gathered for the purpose of establishing an assessment value of a property for property tax purposes falls within the definition of tax information in subsection 21(2). Subsection 21(2) cannot be used to withhold an applicant's own tax information.

"Tax return"

"Tax liability"

Interpretation Note 10 (Section 21(3)):

"If the third party consents to the disclosure" means that the head must not withhold requested information under this exception where the third party concerned has consented in writing to the disclosure. See Third Party Notice for guidance on third party notice provisions.

The information is in a record that is in the custody or control of the British Columbia Archives and Records Service or the archives of a public body and that has been in existence for 50 or more years. 

This phrase recognizes that the sensitivity of business information and with it the injury that might occur to the business interests of the third party on disclosure, decreases with time. The fact that the records must be in the British Columbia Archives or in the archives of a public body reinforces this notion.

"Record"

"Custody" or control"

"British Columbia Archives"

"Archives of a public body"

Sectional Index of Commissioner's Orders

For orders organized by the Act's section numbers, Click here.

For a summary of Commissioner's orders and policy interpretation of key points, Click here.

Last updated: July 16, 2007