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Veolia gets to keep financial model confidential in PFI contract disclosure battle

Waste management giant Veolia has partially succeeded in its battle to prevent disclosure of key details of its £850m PFI contract with Nottinghamshire County Council.

The Court of Appeal has ruled that documents relating to the company’s financial model and profit margin should not be disclosed to Shlomo Dowen, the local elector and action group member who had requested access under the rights of inspection contained in s.15(1) of the Audit Commission Act 1998.

Veolia had suggested that it could “live with” a High Court decision last year in relation to a first set of disputed documents, which included the contract and various invoices.

However, the company’s general commercial counsel, Benjamin Lambert, had warned in a witness statement submitted to the Court of Appeal that disclosure of the second set of documents would cause “very considerable” harm to Veolia. Such harm would eclipse that caused by documents already disclosed to Mr Dowen, he argued.

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Giving the lead judgement, Lord Justice Rix acknowledged the public interest in transparency. The promotion of economy, efficiency and effectiveness in the use of resources was built into the heart of the 1998 Act, he said.

But the judge added that it was plain that there was a “strong public interest” in the maintenance of valuable commercial confidential information.

“If the penalty for contracting with public authorities were to be the potential loss of such confidential information, then public authorities and the public interest would be the losers, and the result would be potentially anti-competitive,” he suggested.

“Moreover, the public interest would remain protected by the auditor's right to access to all such documents (subject to the section 49 protection against further disclosure) combined together with the highlighting of a problem or potential problem by the representations of persons interested, or the questioning or objecting of electors, who come armed with their concerns and the identification of and access to the documents which they seek, even if these documents had to be redacted.”

The judge said commercial confidential information could be considered a “possession” and therefore protection should be provided to Veolia under Article 1 of the first protocol of the European Convention on Human Rights (the entitlement to peaceful enjoyment of possessions).

The inspection rights afforded by the relevant section of the 1998 Act should therefore be read down so as to exclude information protected by the ECHR.

Lord Justice Rix said: “I can at present see no reason why the council could justify providing access to Mr Dowen of [the second set of] documents, at any rate on the present basis that I am considering, which is that there is no limitation on the use to which Mr Down could then put those documents.”

On the first set of documents disclosed after the High Court ruling, the judge said his provisional view would have been to uphold Veolia’s appeal – accordingly any confidential information should have been redacted.

But he acknowledged that, given the documents had already been supplied in full and the company had stated it could live with the result, this was “water under the bridge” in judicial review terms.

Lord Justice Etherton and Lord Justice Jackson agreed with Lord Justice Rix’s ruling, except they refused to rule on the use that Mr Dowen could make on the information that had been disclosed to him.

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