Whether the Regulator was justified in refusing partial access to refusal letters issued to Premier Lotteries Ireland (PLI) apart from the redactions made of the names of individuals
 

Review: Conducted in accordance with section 22(2) of the FOI Act by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

Background

This review arises from a decision on a request to which section 38 of the FOI Act applied in part.  The original request, dated 8 March 2017, was for five categories of records relating to the National Lottery, including decisions of the Regulator which refused applications or submissions made by the National Lottery seeking approval.  PLI, as the affected third party, was notified of the request under section 38.  Section 38 applies to requests which, apart from the required notification procedure, would fall to be granted in the public interest under section 35(3), 36(3), or 37(5)(a) of the FOI Act.  The relevant exemptions relate to confidential information, commercially sensitive information, or personal information about third parties, respectively.  

Following consideration of the PLI's submissions in response to the notification, the Regulator granted the request in part and refused it in part.  Only one category of the request as refused remained within the ambit of section 38, however, as the Regulator ultimately applied other exemptions to the majority of the records to which access was refused.  The applicant applied to this Office for a review of the Regulator's decision on 23 May 2017.  The review was accepted in relation to the category of records to which section 38 applied, namely, the refusal letters issued by the Regulator to which access was refused in part under sections 35(1), 36(1), and 37(1).  During the course of the review, the applicant indicated that he accepted the redactions that had been made of the names of individuals, but he asked that all other redactions be reviewed in light of the public interest in openness and transparency in relation to the operations of the National Lottery.

With the authority delegated to me by the Commissioner, I have now completed my review in accordance with section 22(2) of the FOI Act.  In carrying out my review, I have had regard to the submissions made by the PLI, the Regulator, and the applicant.  In addition, I have examined the records at issue.  I have decided to conclude this review by way of a formal, binding decision.

Scope of the Review

My review in this case is concerned solely with the question of whether the Regulator was justified in refusing access in part to the refusal letters issued by the Regulator to PLI apart from the redactions made of the names of individuals.

Preliminary Matters

Before setting out my findings, I should point out that while I am required by section 22(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement of section 25(3) that I take all reasonable precautions to prevent disclosure of information contained in an exempt record or matter that, if it were included in a record, would cause the record to be exempt.  This constraint means that, in the present case, the extent of the reasons that I can give is limited.  However, I am mindful of the burden of proof under section 22(12)(b) of the Act, which requires the Regulator to show to my satisfaction that its decision to refuse to grant the request was justified.

In addition, I wish to explain the approach of this Office to the granting of access to parts of records.  Section 18 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed.  This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading.  However, this Office takes that the provisions of section 18 do not envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs.  Generally speaking, therefore, this Office is not in favour of the cutting or "dissecting" of records to such an extent.  Being "practicable" necessarily means taking a reasonable and proportionate approach in determining whether to grant access to parts of records.  

Analysis and Findings

Comments providing details of proposed games
The redacted refusal letters at issue in this case include the Regulator's comments on proposals for new games that had been made by PLI.  The comments provide an indication of the game themes, prize structures, and marketing plans under consideration.  In its response to the Regulator's section 38 notification, PLI stated:  "It is imperative that PLI can freely and openly communicate with the Regulator regarding these highly confidential business matters without fear of subsequent publication."  PLI noted that the fact of that such refusals are made demonstrates the exercise of the Regulator's oversight and decision-making powers regarding game approvals, whereas disclosure of the redacted information would give its competitors an unfair and unjust commercial advantage.     

As noted, the proposed games were not approved; therefore, the games have not been made available to the public in the form discussed in the refusal letters.  In its submissions, the Regulator describes the proposals as "trade secrets".  The Regulator explains that, while PLI is the only entity licensed to operate the National Lottery on behalf of the Minister, it is nevertheless subject to market competition from operators who are not subject to the National Lottery Act 2013 (the 2013 Act) or the licensing conditions under which PLI must operate.   The Regulator states:  "If PLI's trade secrets were to be released and disclosed to one or more of PLI's competitors, it would be liable to cause real (or significant) harm to PLI as other parties may be able to duplicate the proposed schemes or the underlying game themes or mechanics.  These competitors (which are not subject to the 2013 Act or the Licence) could seek to take advantage of research and know-how carried out by PLI and could release games, or games with the same or similar themes or mechanics, . . . with resultant real (or significant) harm in the form of financial loss to PLI."  Referring to Clause 20.6 of the licence agreement with PLI, the Regulator contends that it is required by law to maintain the confidentiality of the PLI's trade secrets and commercial plans and that section 35(1)(b) of the Act therefore applies.  It also argues that the redacted information is exempt under sections 36(1)(a) and (b) of the Act.

Section 35(1)(b) is a mandatory exemption that applies where "disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule) or otherwise by law".  Under section 35(2), the confidentiality exemption does not apply to a record prepared by a staff member of a public body or a person who is providing a service for a public body under a contract for services "in the course of the performance of his or her functions unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than a public body or head or a director, or member of the staff of, a public body or a person who is providing or provided a service for a public body under a contract for services".  
PLI is not a service provider within the meaning of the Act and therefore section 35(2) does not operate to disapply the confidentiality exemption in this case.  Clause 20.6 of the licensing agreement provides:

"Notwithstanding anything to the contrary in this Licence, the Regulator shall:

not, unless compelled to do so by law (in which event the Regulator shall forthwith notify the Licensee of such compulsion in writing), under any circumstances directly or indirectly disclose or divulge to any third party any of the Licensee's confidential information which may be provided to the Regulator pursuant to any provision of this Licence and/or the Act, without the prior written permission of the Licensee.  The Licensee's confidential information shall include, without limitation, the Licensee's trade secrets, management accounts, financial structure, financial statements (whether audited or not), commercial plans, contractual arrangements with any third party, shareholders agreements and arrangements and details of the Licensee's human and other resources, management, policies and procedures unless such information is already in the public domain.  The foregoing shall apply mutatis mutandis to any other confidential information of a third party provided by the Licensee to the Regulator".

I accept that the redacted information in the refusal letters regarding the proposed games contains commercial plans within the meaning of Clause 20.6 of the licensing agreement.  The applicant accepts that some of the information in the records at issue may be confidential and commercially sensitive, but he suggests that some is not.  He indicates that the name of at least one of the proposed games is well known.  However, the full name of the game he refers to and that of one other game have been disclosed in the released records and are not, in and of themselves, at issue in this case.  I find no basis for disputing the claims of PLI and Regulator that the details regarding the proposed games that have been redacted remain confidential.  I am therefore satisfied that the redacted details regarding the proposed games are subject to a duty of confidence provided for by the licensing agreement.
 
Section 35(1)(b) is not subject to the general public interest balancing test under section 35(3), but nevertheless, it is noteworthy that the records at issue in this case are refusal letters to which access has been granted in part.  To the extent that public interest considerations are relevant, I note that the information disclosed serves the public interest in openness and transparency in relation to the manner in which the Regulator carries out its functions to some degree without undermining the public interest to be served in protecting the commercially confidential information of PLI, a private commercial entity.  In the circumstances, I am satisfied that section 35(1)(b) applies.  

Other comments
Having regard to the comments made by the Regulator in the refusal letters regarding the proposed games, I alternatively find that section 36(1)(b) of the FOI Act applies.  All of the redacted comments are based on the proposals made but some are in the nature of assessments that do not, in and of themselves, disclose details of any proposed commercial plans.  The comments may be regarded as critical, however, as is to be expected given that approval was refused.  Moreover, it seems to me that disclosure of the comments without some of the related details regarding the proposed games would be misleading and therefore contrary to section 18 of the Act.  I will nevertheless briefly explain why I am satisfied that section 36(1)(b) applies to the records at issue.

Section 36(1)(b) of the FOI Act provides that a request shall be refused if the record concerned contains "financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation".  Section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than by refusing the request (section 36(3) refers)

The essence of the test in section 36(1)(b) is not the nature of the information, but the nature of the harm which might be occasioned by its release.  I note that the standard of proof is relatively low under section 36(1)(b) in that the mere possibility of prejudice to the competitive position of the person concerned is sufficient.  However, in the High Court case of  Westwood Club v The Information Commissioner [2014] IEHC 375, Cross J. held that it is not sufficient for a party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive.  A party opposing release should explain why disclosure of the particular records could prejudice its competitive position. 
In this case, PLI and the Regulator have explained how disclosure of the proposals could put PLI at a competitive disadvantage by allowing competitors to take advantage of research and know-how carried out by PLI in order to develop and release games with the same or similar themes or mechanics.  Having regard to the contents of the records at issue, I accept that their concerns are well-founded.  Moreover, I accept that disclosure of the critical comments in the refusal letters could also put PLI at a disadvantage in relation to its competitors and possibly result in reputational damage.  I therefore find that the comments are commercially sensitive within the meaning of section 36(1)(b) of the Act.  

As indicated above, the partial release of the refusal letters has served the public interest in openness and transparency to some degree.  On the other hand, the provisions of section 36 itself reflect the public interest in protecting commercially sensitive information.  The purpose of the public interest test is to strike a balance between competing interests insofar as they are relevant.  As noted in previous decisions, including Case 150209 (Colin Coyle of The Sunday Times and Office of the Regulator of the National Lottery), available at www.oic.ie, the Commissioner takes the view that the FOI Act was designed to increase openness and accountability in the way in which public bodies conduct their operations; generally speaking, it was not designed as a means to open up the operations of private enterprises to scrutiny.  Accordingly, I find that, on balance, the public interest would be better served by refusing access to the records at issue.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the decision of the Regulator in this case. 

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision.  In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Elizabeth Dolan
Senior Investigator