Originally published in the Freedom of Information Journal, September / October 2007
Third party access to documents held by competition authorities is becoming increasingly important now that the burden of enforcing competition law is progressively shifting from the public to the private arena.
No competition authority can realistically expect that private enforcement of competition law will become the norm overnight. However, there is a clear trend by competition authorities, in Europe in particular, to facilitate private enforcement of competition law.
European Commission's Green Paper
In an introductory note to the European Commission's 2005 Green Paper on Actions for Damages ('Green Paper'), the reasons to encourage private enforcement are as follows:
"Facilitating damages claims for breaches of the antitrust rules will not only strengthen the enforcement of competition law, but will also make it easier for consumers and firms who have suffered damage from an infringement of competition law rules to recover their losses from the infringer& In the majority of Member States, actions for damages for the infringement of EC and national competition law have been extremely limited&[and] awards for damages by national courts at the initiative of private parties are much less common."
However, the European Commission notes that actions for damages are often based on factually complex scenarios, and victims of anticompetitive conduct often have difficulty providing evidence of such conduct. This evidence is usually only available to, or access to it is controlled by, the alleged perpetrator of anticompetitive conduct.
The Green Paper goes on to say that, "consideration could be given to placing an obligation on the defendant to disclose documents submitted to a competition authority. In cases in which the Commission or an NCA [national competition authority] has undertaken an investigation, it is likely to hold relevant evidence which could be important for a claimant in follow-on cases. Use of those materials in subsequent civil actions could be helpful in proving the damages claim."
The European Commission has scheduled the publication for a White Paper for early 2008, which should provide a better indication of whether, to what extent and in what manner, the European Commission is going to facilitate access to documents in competition cases. Yet, before this White Paper is published, parties seeking to rely on documents in the possession of public authorities to bolster their damages action or similar cases, will have to continue to rely on available mechanisms, such as the Freedom of Information Act 2000 ('FOIA').
General Background
The Office of Fair Trading ('OFT') and the Competition Commission are amongst the 100,000 public authorities to whom the FOIA applies. Both authorities have a publication scheme in place, and it is under this scheme that they deal with FOIA requests for information in their possession.
In a competition law context, there is a tension between the obligation to disclose information and the restrictions on disclosure of "specified information" in Part 9 of the Enterprise Act 2002 ('Part 9').
Part 9 places a restriction on the OFT's disclosure of certain information (information the OFT has received under the statutory functions of the Competition Act 1998). The OFT has taken an assertive line on this restriction, and since the FOIA's entry into force in 2005, OFT officials have repeatedly stated that the restrictions on disclosure in Part 9 would override the general obligation to disclose information under the FOIA. There were some who doubted whether this was the correct legal analysis, and before long the position held by the OFT was tested in a dispute (Pernod v OFT, 6th June 2006) before the Information Commissioner.
Pernod v OFT
A previous article published by the authors ["Pernod v OFT — FOIA is trumped by the Enterprise Act," Freedom of Information, Volume 3 Issue 1, pp. 3—5], dealt with the Information Commissioner's Decision Notice in detail. In this case, the Information Commissioner clarified the legal position with a brief yet powerful confirmation that the OFT was essentially correct, and that restrictions on disclosure contained in Part 9 overrode the FOIA general disclosure obligations.
The Decision Notice was criticised primarily for providing the UK competition authorities with a strong shield regarding information held by the authorities — leaving victims of anticompetitive behaviour who wish to seek redress with only a weak sword.
This decision by the Information Commissioner appears to contradict the "expansive" approach that the Information Commissioner (and the Information Tribunal) have taken in their decision-making to date.
In the National Maritime Museum case, the Information Tribunal set the bar relatively high when considering the threshold of how much commercial prejudice needed to be shown in order to justify the requested information being exempt from disclosure. This overruled the Information Commissioner's decision in the process, and required public authorities to identify a "real and significant" risk of prejudice rather than a hypothetical or remote risk.
Against this background of a culture of openness and the "if in doubt, disclose" mantra, it is all the more surprising that the Information Commissioner was willing, in the Pernod case, to enable the UK competition authorities to justify a wide-ranging exemption from this culture. It is surprising particularly as the European Commission is still some way off deciding whether to encourage national actions to facilitate access to documents and evidence for private enforcement purposes.
There must be a balance between the appropriate disclosure of information and the justified restrictions on disclosure. With the correct balance between public interest in disclosure and public interest in keeping the information confidential and non-accessible, companies and individuals will continue to provide information to UK competition authorities.
It is important for the Information Commissioner to scale back the Part 9 decisional practice and give precedence to the disclosure of documents. This would facilitate the private enforcement damages actions that both the European Commission and national competition authorities claim they wish to encourage.
The English And Scottish Dichotomy — Dey v OFT
The case Dey v OFT (16th April 2007) exemplifies the Information Commissioner's current stance on the Part 9 issue, and confirmed the decisional practice established by the Pernod case.
Mr Dey complained to his local Trading Standards Office about a company and followed up his complaint with an FOIA request to disclose the number of similar complaints against the relevant company. The Department of Trade and Industry ('DTI'), the addressee of the FOIA request at the beginning of the process, refused to release the information, and cited the section 43 exemption on commercial prejudice.
On 1st April 2006 the OFT took over the DTI's responsibility for trading standards issues, and the management of the FOIA request transferred to the OFT. The OFT changed its position on Mr Dey's FOIA request, and, instead of relying on the section 43 exemption, it simply argued that since the information requested was "specified information" within the meaning of Part 9, section 44(a) of the FOIA prohibited the disclosure of the requested information.
The interplay between Part 9 and the general disclosure regime under the FOIA is provided for in section 237(6) of the Enterprise Act 2002 ('section 237(6)'). The section states that Part 9 "does not affect any power or duty to disclose information which exists apart from [Part 9]."
The Information Commissioner's reasoning in Dey v OFT is straightforward:
- section 237(6) of the Enterprise Act refers to a power or
duty to disclose information other than in Part 9;
- there is no duty to disclose information under the
FOIA;
- therefore, in the words of section 44 of the FOIA,
disclosure of the information requested was "prohibited
under another enactment," namely Part 9; and
- as section 44 is an absolute exemption, no public
interest considerations were relevant and the OFT's
refusal to disclose the information requested was
upheld.
ICO's Decision Notice — Dey v OFT
The authors (and, as will become clear below, the Scottish Information Commissioner) take issue with this interpretation of section 237 (6), and crucially the words "power or duty."
Whilst it is acknowledged that neither section 1 nor any other section of the FOIA impose a duty to disclose information, there is most certainly a power for public authorities to whom the FOIA applies to disclose information requested. The Information Commissioner has previously pointed out (in a guidance booklet advising public authorities how to comply with their FOIA obligations) that even if a FOIA exemption applies, information does not necessarily have to be withheld.
Essentially, if exemptions apply to information whose disclosure is sought, it gives the relevant public authority the right, but not the obligation, not to disclose such information. Public authorities have the power to disclose information exempted under the FOIA, even if such disclosure of exempted information may lead to corresponding consequences for the public authority disclosing the information.
Taking this line of argument to its logical conclusion, section 237(6), which in its own words does not affect any power to disclose information which exists apart from [Part 9], should not enable Part 9 to override the provisions of the FOIA in the way the UK Information Commissioner confirmed that it does.
Scottish ICO's Decision Notice
The Scottish Information Commissioner's finding in the Reid v Dumfries and Galloway Councils (5th December 2006) case takes a diametrically opposed view to the Information Commissioner in Dey, even though the facts were similar.
Although there is separate Scottish FOI legislation, it is materially identical for the purposes of this analysis. On the section 237(6) point, the Scottish Information Commissioner states that: "the effect of this subsection is (intended or otherwise) to be to subordinate the restrictions on disclosure of specified information contained within Part 9 of the EA to any duty or power that exists through rules found somewhere other than in Part 9 of the EA.&Thus, if [Scottish FOI legislation] creates either a duty or a power to disclose information, it will override the provisions of Part 9 of the EA, and no prohibition on disclosure will exist where a request for information is made."
Taking this argument a step further, even if an exemption were to apply, the Information Commissioner's own guidance states that this does not deprive public authorities of the power to disclose the information requested, therefore section 237(6) applies, and the FOIA is not to be subordinated to Part 9.
A public authority in Scotland has a discretion concerning whether or not to disclose information falling within Part 9, depending on whether, as pointed out above, the disclosure of such information would be suitable on public interest grounds.
Information Tribunal's Judgment — Dey v OFT
The saga continued as Mr Dey, clearly heartened by a very helpful decision on similar facts in his favour, appealed the Information Commissioner's decision to the Information Tribunal. In the Information Tribunal's judgment, it disagreed with the reasoning of the Scottish Information Commissioner, and agreed with the OFT that the wording in section 2 of the FOIA, which makes the information disclosure requirement in section 1 of the FOIA expressly subject to absolute exemptions, negated the effect of section 237(6) and therefore Mr Dey was unsuccessful in his appeal.
Case Law Analysis
Regardless of whether or not one agrees with the Information Tribunal's judgment in the Dey case, it is undeniable that on an issue of considerable practical importance, not only to competition practitioners and their clients, but to anyone requesting information from public authorities which may fall within the scope of Part 9, there is a fundamental disagreement between the Information Commissioner and the Scottish Information Commissioner as to the correct interpretation of section 237(6). This appears to be a suitable matter for a higher court to decide, despite the fact that, due to the two separate FOI regimes in Scotland and the rest of the UK, a continuing divergence cannot be ruled out.
However, it is to be hoped that a higher court judgment will settle the issue, or it will not be long before a creative applicant approaches the OFT's Scottish Representative Office (which has been open since March 2007) seeking to exploit the more favourable regime in Scotland.
Another option would be for the Secretary of State to make use of his powers under section 75 of the FOIA to repeal or amend the enactment capable of preventing the disclosure of information for the purpose of removing or relaxing the prohibition in section 44 of the FOIA.
Opening Part 9 Gateways
In this regard, it should also be noted that The Enterprise Act 2002 (Disclosure of Information for Civil Proceedings etc.) Order 2007 is due to come into force on 1st October 2007, and has created a number of new gateways through which information can be disclosed than is currently the case. One of the new gateways allows information to be disclosed for "proceedings relating to or arising out of a legal right or obligation of a consumer." An interesting question arises as to whether "claims brought on behalf of consumers" under section 47B of the Competition Act could in future benefit from this new gateway. It seems unlikely to be a long time before this potential avenue is explored and the question will be raised in practice.
Conclusion
Private enforcement of competition law is, in Europe at least, currently underdeveloped and in need of reform. One of the most pressing reforms is to devise a way of providing claimants with access to relevant evidence, as this is crucial for the effectiveness of the private enforcement process.
Whilst possible reforms are being considered both at EU level (2005 Green Paper, 2008 White Paper) and at UK level (2007 consultation on private enforcement in the UK), it is paramount that claimants are able to use other mechanisms at their disposal, such as the FOIA, to their best possible advantage.
The narrow interpretation of section 237(6) by the OFT, the Information Commissioner and the Information Tribunal goes against both the spirit of the FOIA and is certainly doing nothing to promote private enforcement.
Should the position on section 237(6) not change, potential damages claimants will need to wait for private enforcement reform at EU and/or national level to enable private enforcement to become fully effective. Either that or they will seek to bring their claims in Scotland!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
