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Thursday, September 09, 2010

Tasmanian Supreme Court delves into competitive disadvantage

It took almost 20 years to surface in the courts and is now somewhat moot as the Freedom of Information Act 1991 has been repealed and replaced by the Right to Information Act from 1 July, but the decision by Justice Porter of the Tasmanian Supreme Court in Forestry Tasmania v Ombudsman [2010] TASSC 39 highlights shortcomings in the FOI act business affairs exemptions. However the term "competitive disadvantage" is used in sections 37 and 38 of the replacement RTI act and this aspect of the judgment is of ongoing relevance in Tasmania and Victoria where similar terms are used.  Both provisions are now subject to the public interest test as they appear in Part 2 Division 3 of the RTI act, removing the FOI act uncertainty referred to below.

Justice Porter found errors of law in the Ombudsman's determination on review of a decision to refuse access in response to an application by a member of state parliament, Kim Booth for information about the cost involved in Forestry Tasmania's arrangements with a commercial television company for commissioning and production of the television program "Going Bush."(ABC News and The Mercury were premature in concluding FT achieved more than a win on legal points in this round, as the Ombudsman is now to reconsider the matter applying principles set out in the judgment.)

The errors of law arose from incorrect interpretation of "competitive disadvantage", the introduction of the element of "unreasonableness" in determining the term as set out in section 31 of the act, and taking into account an irrelevant consideration. The section renders information acquired by an agency from a business, commercial or financial undertaking exempt where disclosure would be likely to expose the undertaking to competitive disadvantage. Section 31(2) seeks to qualify the exemption with a reference to  unreasonableness, and the public interest. Justice Porter [15] said the section was "very badly drafted", that inclusion of the word "unreasonably" in subsection 2 but not 1 resulted from an oversight during parliamentary process, and that the term should be ignored in determining whether disclosure would expose an undertaking to competitive disadvantage.

The proper approach [19-20] was to determine this issue, before considering whether subsection 2 had relevance. The Ombudsman had erred in addressing the question as whether disclosure would unreasonably expose the undertaking to competitive disadvantage. Justice Porter left open the question whether public interest considerations applied in this or any case.

On competitive disadvantage, Justice Porter [55] said
"In my view, what the provisions refer to as a competitive disadvantage is something which affects one entity to the extent that it may not be able to generate as high a level of profit relative to its competitive rivals as would be expected, if all else being equal, the particular entity did not face the reason or circumstance. A competitive disadvantage will not necessarily be something which, in strict terms, impacts on an actual ability to compete, and the level of competition. That would involve a process which I do not think Parliament intended. What the concept entails is something which puts one entity at a disadvantage in relation to a matter which affects its profit making capacity relative to its competitive rivals. Further, I think that practical business sense compels the view that the term would include a disadvantage to an undertaking or agency in negotiating with a supplier of goods or services. That is, a competitive disadvantage arises when a supplier acquires information which gives it a negotiating advantage leading to financial detriment."

The other point of note that emerges from the judgment is that Section 32 of the FOI act also relevant in this case, involves no public interest or other balancing test (Justice Porter at 49 refers to this as curious), where an agency engaged in trade or commerce can show that disclosure of information of a business, commercial or financial nature is likely to expose it to competitive disadvantage.
(Update: The Ombudsman, on referral of the Booth matter, found all the documents were exempt under s 32(a))

The Victorian Freedom of Information Act (s 34), is the only other Australian FOI act that includes the similar term, information that "would be likely to expose the agency to disadvantage", without the qualifier "competitive", but in respect of a third party, not an agency, contains a provision similar to s31(2)(c) of the Tasmanian act.

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