Chapters: 01 | 02 | 03 | 04 | annex A | annex B
Stating the exemption
Section 43 of the Freedom of Information Act provides that:
1.1 Trade Secret: The Act does not define a trade secret, nor is there a precise definition in English law. However the essence of a trade secret is generally agreed to comprise the following: [footnotes 1]
Trade secrets are normally associated with such things as secret processes of manufacture, special formulae etc. The expression carries with it the idea of something commercially valuable in its own right which is private to the owner. By contrast, information relating to a company's solvency, its ability to carry on business and its relationship with its holding company, although commercially sensitive, are not trade secrets. The Act is capable of applying to a public authority's own trade secrets and (perhaps the more usual situation) the trade secrets of others' businesses. In case of doubt about whether information constitutes a trade secret, legal advice may need to be sought.
1.2 Commercial: 'Commercial' can be taken to mean relating to an activity in the way of a business, trade or profession. Again, the Act is (expressly) capable of applying not only to the commercial interests of outside organisations, but also to a public authority's own commercial interests. When it comes to considering a public authority's own interests, a range of circumstances may be relevant, including the authority's position in the market place both as a purchaser and as a supplier (see further below). But the prejudice to the commercial interests of a public authority must be contrasted with prejudice to other interests such as the body's political or other non-commercial reputational interests which are not protected by this exemption.
1.3 There is a distinction between commercial and financial interests:
Although the commercial and financial interests of a commercial entity may be extremely closely related - if it has a weak financial position, that will almost certainly affect its ability to engage in commercial activity - that is not necessarily so in the case of a public authority. While there may be cases where prejudice to the financial interests of a department may affect its commercial interests, this will not always be the case. (For an explanation of how disclosure may prejudice financial interests see the chapter on section 29.)
1.4 Any person: The 'person' whose interests may be prejudiced could be any company, sole trader or private individual or the public authority itself. It could relate to more than one person (for example to the members of a partnership in that capacity), or, for example, to all businesses in a particular sector. By virtue of section 81 of the Act, a government department counts as a person for these purposes. Section 43(2) also provides explicitly that the person in question can be the public authority holding the information itself.