Chapter 5: Protecting commercial interests


This chapter deals with the reasons for which information may be withheld on commercial grounds, sometimes broadly referred to as the “commercial sensitivity” grounds.

Two of the grounds in section 9(2) are specifically targeted at commercial activity. They are paragraphs (b) and (i):

9(2) [T]his section applies if, and only if, the withholding of the information is necessary to –

(b)protect information where the making available of the information–

(i)would disclose a trade secret;167 or

(ii)would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information;168 or

(i)enable a Minister of the Crown or any department or organisation holding the information to carry out, without prejudice or disadvantage, commercial activities;169

In addition, there are two other grounds, (ba) and (j), which go much wider than commercial information, but can clearly be used to protect it:

(ba) protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information-

(i)would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied;170 or

(ii)would be likely otherwise to damage the public interest;171 or

(j) enable a Minister of the Crown or any department or organisation holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).172

None of these grounds are conclusive, and all are able to be overridden by the public interest in disclosure in a particular case.

In 1980 the Danks Committee accepted the need for protection of commercial interests but emphasised the need for balance between these commercial interests and the public interest in access to information. It considered that “no general rule about protection will fit” and the merits of each case would need to be considered. Since 1980, statutory reform of the governance models for central and local government in relation to economic transactions has transformed the environment in which the OIA commercial withholding provisions operate.173 Although the Danks Committee report pre-dated these developments, it recognised the web of interests involved in publicly supported business enterprises, which distinguishes them from enterprises exposed fully to market forces:174

Not all government business activity has the profit-seeking, competitive colour of private enterprise. And where national matters of economic or social moment such as the pursuit of regional development or of fuller employment become objectives, taxpayers who are called upon to subsidise such quasi-commercial activities should be informed about strategies and costs. Where commercial, social, and economic objectives become conjoined, as in the case of the Railways, it is impossible to find a comprehensive rule which will apply, and again judgments on the merits of each case will be called for.

The late 1980s and 1990s saw extensive growth in commercially-oriented public organisations. The range of activities is potentially vast. An indicative list of situations where a public authority might hold commercial information includes procurement, purchasing, regulation (for example issuing licences or investigating breaches of regulations), public-private partnerships, policy development (for example policy aimed at promoting a particular industry) and policy implementation (for example the awarding of grants for business proposals).

In 2010 the Crown Owned Monitoring Unit in the Treasury (COMU), which provides strategic ownership advice to the Government on its commercial assets, and monitors the performance of entities responsible for those assets, oversaw central government business to the value of $60 billion. These entities report to Ministers and are also subject to a financial reporting regime appropriate to their structure, as well as being subject to the OIA. They include State Owned Enterprises, Crown research institutes, Crown financial institutions, Crown companies and some statutory entities. Under the Local Government Act 2002, councils can set up organisations to undertake activities and can hold voting interests in organisations outside the council. A study commissioned by the Department of Internal Affairs identified 257 council organisations that deliver services such as transport, port operations, provision of water and energy, removal of waste, libraries, museums and sports venues with a total value in June 2007 of $6 billion.175

A council controlled organisation (CCO) is one that is 50 per cent or more owned by a council, either solely or with other councils. A council controlled trading organisation is one that undertakes trading with the purpose of making a profit. The structure of CCOs can vary widely. For example they can be companies, trusts or joint ventures. Apart from a few statutory exceptions, all CCOs are subject to the official information provisions of the LGOIMA.176

The 2010 Auckland City governance model amalgamates some existing commercial enterprises and initiates others, and may be the forerunner of further evolution of service provision in other local authority regions. The LGOIMA applies to the new Auckland CCOs, and may become more important in terms of public accountability than at present since the new legislation alters the reporting and consulting requirements of these CCOs from that set out in the Local Government Act 2002.

LGOIMA, s 7(2)(b)(i).

Section 7(2)(b)(ii).

Section 7(2)(h).

Section 7(2)(c)(i).

Section 7(2)(c)(ii).

Section 7(2)(i).

For example in the State Owned Enterprise Act 1986; State Sector Act 1988; Public Finance Act 1989; Crown Entities Act 2004 and Local Government Act 2002.

Committee on Official Information Towards Open Government: General Report (Government Printer, Wellington, 1980) at [46]. See also the helpful discussion by the Information Authority in Review No 1, A Review of Provisions in the Official Information Act 1982 That Protect Commercial Information, Together with Proposals for the Amendment of the Act (Wellington, 1984).

MWH Consultants Council Controlled Organisations: Analysis of LCTCCPs and Annual Reports (Report prepared for Department of Internal Affairs, June 2008). The study included energy companies, port companies and Watercare Limited because of their significant contribution to council revenue, although these categories are excluded from the requirements of the Local Government Act 2002. The report notes that there were limits on the information made available to them in the course of their study.

Local Government Act 2002, s 74(1).