Telstra Australia Limited and Australian Competition and Consumer Commission [2000] AATA 71 (7 February 2000)

Last Updated: 17 February 2000

DECISION AND REASONS FOR DECISION [2000] AATA 71

ADMINISTRATIVE APPEALS TRIBUNAL )

) No A99/109

GENERAL ADMINISTRATIVE DIVISION )

Re TELSTRA AUSTRALIA LIMITED

Applicant

And AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Respondent

DECISION

Tribunal Mr B.J. McMahon (Deputy President)

Date 7 February 2000

Place Canberra

Decision The decision under review is affirmed.

(Sgd) BJ McMahon

..............................................

Deputy President

CATCHWORDS

FREEDOM OF INFORMATION - refusal of access to documents used to found a anti-competition notice under Part XIB Trade Practices Act 1974 - information supplied by third parties - whether disclosure would reasonably have a substantial effect on the proper and efficient conduct of agency operations - whether disclosure contrary to public interest - whether disclosure would prejudice the future supply of information - whether disclosure would found an action for breach of confidence - whether there was an inconsistency in disclosure - public interest for and against - adverse effect on future supply of information - confidentiality affirmed

WORDS AND PHRASES - commercial churn service - anti-competition notice

Freedom of Information Act 1982 ss 22, 40, 40(1)(d), 43, 43(1)(c)(ii), 45

Trade Practices Act 1974 Part XIB - The Telecommunications Industry: Anti-competitive Conduct and Record-keeping rules, s 155

Harman v Secretary of State for the Home Department (1983) 1 AC 280

Abigroup Limited v Akins and Others (1997) 42 NSWLR 623

Re Kamminga and Australian National University (1992) 15 AAR 297

Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) and Another (1987)

14 FCR 434

Searle Australia Pty Limited v Public Interest Advocacy Centre and Another (1992)

108 ALR 163

ASCIC v Australian Federal Police 11 ALN N 184

Re Angel and Department of Arts, Heritage and Environment (1985) 9 ALD 113

Attorney-General's Department and Another v Cockcroft (1985) 64 ALR 97

Re Drug Houses of Australia and Corrs Pavey Whiting & Byrne and Department of Health (1987) 14 ALD 244

Re B and Brisbane North Regional Health Authority (1994) 1 QAR 279

REASONS FOR DECISION

Mr B.J. McMahon (Deputy President)

1. This is an application to review a decision of the respondent made and internally reviewed under the provisions of the Freedom of Information Act 1982.

2. On 14 August 1998, solicitors for the applicant applied under that Act for access to:

"1 each staff paper, report, memorandum or other document prepared by Commission staff or on behalf of the Commission, and submitted to or considered by the Commission, the Chairperson or the Deputy Chairperson of the Commission, in relation to:

(a) the issue of the section 155 notice dated 24 June 1998 and served on Telstra on 24 June 1998;

(b) Telstra's response or responses to that section 155 notice; or

(c) The issue of the competition notice dated 10 August 1998 in respect of Telstra's commercial churn service, other than the staff paper sent to Telstra under cover of the Commission's letter dated 26 May 1998;

2 each submission, letter or other document provided by or on behalf of:

(a) AAPT Limited;

(b) Macquarie Corporate Telecommunications Pty Limited;

(c) Optus Communications Pty Limited;

(d) Switch Telecommunications Pty Limited; or

(e) Any other company, industry body or organisation (other than Telstra and the Commission), and received by the Commission since 1 January 1998 in relation to Telstra's commercial churn service;

3 each document in the Commission's possession or control containing all or part of the information which is referred in the following sentence of the Commission's media release dated 10 August 1998 in respect of the competition notice:

"Information received by the ACCC that Telstra's transfer conditions substantially hinder the development of local call competition and the further development of long distance competition";

4 each document in the Commission's possession or control recording all or part of the consultation referred to in the sentence in the Commission's media release dated 10 August 1998 which stated:

"the ACCC has consulted with industry participants and has formed the view that issuing a Competition Notice will assist the resolution of customer transfer problems and further the ACCC objectives, especially relating to compliance with the Trade Practices Act 1973 and improvement in market conduct.""

3. The reference to the applicant's "commercial churn service" is a reference to the mechanisms and procedures adopted by the applicant (Telstra) in redistributing telecommunications business to competitors named in paragraph 2 of the above request. Part XIB of the Trade Practices Act 1974 introduced provisions designed to ensure competition in a market previously the sole preserve of Telstra. The broad policy intent of the legislation was to establish, from 1 July 1997, open market access to both telecommunications infrastructure and service provision. Part XIB was introduced to deal with anti-competitive conduct (as defined) in the telecommunications industry. The respondent (ACCC) is empowered by the legislation to seek an injunction and also to issue a competition notice which states that the carrier or service provider has contravened, or is contravening, the competition rule, which is also defined. The competition notice is prima facie evidence of the matters in the notice and if the carrier or carriage service provider continues the conduct the ACCC can seek Federal Court orders for various remedies and pecuniary penalties.

4. There has been litigation between Telstra and the ACCC arising out of these legislative provisions. Notices under section 155 of the Trade Practices Act requiring the provision of information and other material have been served, and a series of competition notices have emerged from changing circumstances over the period during which preparations have been made for the substantive hearing of the litigation. This is expected to commence in approximately two months time. Although the section 155 notice and the competition notice referred to in paragraph 1 of the above request have been replaced by later notices, and although the precise issues to be determined in the litigation are different from those raised in those notices, nevertheless, the notices the subject of the request are part of an ongoing investigation and constituted a series of steps leading up to this litigation. Material encompassed by the terms of the above request will have some value to Telstra and may have some bearing on the resolution of the litigation.

5. The link between the Federal Court litigation and this review by the Tribunal was emphasised by an application made to the Federal Court shortly prior to the Tribunal hearing. Telstra was unsuccessful in obtaining the consent of the Court to the use by it of certain documents (including witness statements) filed in connection with the Court proceeding, in the Tribunal proceedings. Such leave was necessary in accordance with the principle first established in Harman v Secretary of State for the Home Department (1983) 1 AC 280 and recently reviewed, together with all other relevant authorities, by Bainton J in Abigroup Limited v Akins and Others (1997) 42 NSWLR 623.

6. More than 500 documents were identified as falling within the terms of the request. Some were released and some others were subsequently not sought. By the time proceedings were commenced in this Tribunal, there were 223 documents in dispute. Through a process of negotiations, the ACCC has since released 23 of these in full and 29 in part. Telstra no longer seeks access to 192 of the documents. The process of refining the issues and releasing the documents continued during the course of the hearing before this Tribunal as the ACCC had further opportunities to consult with some of the competitors mentioned in paragraph 2 of the request. By the time of final submissions, the number of documents remaining in issue had been reduced to eight. Of these, exemptions were claimed in respect of the whole of two of the documents and for part of the remaining six.

7. Exemptions were claimed under the relevant parts of sections 40, 43 and 45 of the Freedom of Information Act. Section 40 exempts a document if its disclosure would or could reasonably be expected to have a substantial effect on the proper and efficient conduct of the operations of an agency. The section has no application in respect of matter in the document, the disclosure of which, under the Act, would, on balance, be in the public interest.

8. Section 43 exempts a document if its disclosure under the Act could reasonably be expected to prejudice the future supply of information to the Commonwealth or an agency for the purpose of the administration of a law of the Commonwealth or of a Territory or the administration of matters administered by an agency. There is no specific public interest test prescribed by this section although, as will later be seen, the existence or absence of public interest may be a factor in determining the reasonableness of the expectation.

9. Section 45 exempts a document if its disclosure under the Act would found an action by a person other than the Commonwealth for breach of confidence.

10. A good deal of argument and evidentiary material was put forward by the applicant to demonstrate the possibility of inconsistency in disclosure. From the descriptions of each of the documents given in the schedule prepared by the ACCC in accordance with this Tribunal's practice direction, the applicant assumed certain contents and sought to show that the material contained in those documents, or some of it, had previously been disclosed to Telstra in documents already released.

11. A schedule was prepared by Telstra, supported by primary documents to which it referred, as a basis for the submission. This schedule was closely examined by officers instructing counsel for the respondent. He was able to assert, in his written submissions, that none of the eight documents remaining in issue contained information that had been disclosed in the documents relied upon by Telstra for its inconsistency argument or in any other public forum. Naturally, none of these eight documents was available to Telstra or its officers who instructed its counsel. I was therefore invited to examine the contents of the eight documents (and in the case of six of them, the portions for which exemptions had been claimed) to determine for myself whether the assertion by counsel for the respondent was correct.

12. Clearly an application for exemption under section 45 must be based upon a quality of confidentiality in the material contained in the document. In Re Kamminga and Australian National University 15 AAR 297 at 304 and 305, this Tribunal (presided over by its President) adopted as the appropriate test to be applied in section 45 cases a passage from the dissenting judgement of Gummow J in Corrs Pavey Whiting and Byrne v Collector of Customs (1987) 14 FCR 434 at 443. The Tribunal (quoting His Honour) said:

"It is now settled that in order to make out a case for protection in equity of allegedly confidential information, a plaintiff must satisfy certain criteria. The plaintiff: (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question; and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence; and (iv) there is actual or threatened misuse of that information: Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215; [1963] 3 All ER 413n, at 415; The Commonwealth v John Fairfax and Sons Ltd (1980) 147 CLR 39 at 50-51; O'Brien v Komesaroff (1982) 150 CLR 310 at 326-328. It may also be necessary as Megarry J thought probably was the case (Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 48), and as Mason J (as he then was) accepted in the Fairfax decision was the case (at least for confidences reposed within government), that unauthorised use would be to the detriment of the plaintiff."

The Tribunal adopts this passage as an appropriate test to apply in determining whether an action would lie against the Commonwealth."

13. It was the submission of the applicant that if there had been a disclosure of the information in the eight documents to Telstra then the necessary quality of confidentiality did not exist. Release of documents to a freedom of information applicant is, of course, release generally. If any of the information had been communicated to Telstra in documents released since the date of the original request, then it could fairly be said that such information was "common or public knowledge". I have undertaken a comparison of the disputed passages with the material to which I was referred in a folder of documents provided in conjunction with the inconsistency argument. I did not, of course, have the benefit of any technical assistance from officers of either Telstra or the ACCC. From my own resources, however, I was unable to find any example of a direct duplication. Some of the extracts deal with topics that are dealt with in some of the documents to which I was referred. However, I could find no coincident passages which might abort the otherwise confidential nature of the material in the eight documents.

14. Irrespective of this argument, however, I have concluded that the respondent must succeed in its claims for exemption in relation to all documents under both sections 40 and 43. It is therefore not necessary to examine the section 45 claims. The inconsistency argument was directed primarily to the absence of compliance with the second criterion set out in the passage quoted above. If my researches are shown to be wrong then any particular divulgence will not undermine claims for exemption under the other two sections.

15. The first task, therefore, is to determine whether disclosure would or could reasonably be expected to have a substantial adverse effect on the proper and efficient conduct of the operations of the ACCC. The phrase "could reasonably be expected to" simply refers to an expectation that is based on reason, that is to say one for which real and substantial grounds exist when looked at objectively (Searle Australia Pty Limited v Public Interest Advocacy Centre and Another (1992) 108 ALR 163 at 176). The reference to a "substantial adverse effect" has been explained by Muirhead J in ASCIC v Australian Federal Police 11 ALN N 184, by adopting the appropriate dictionary definition, as meaning "real or of substance and not insubstantial or nominal". The effect reasonably expected is one which will cause the agency to alter the way in which it operates or conducts operations in a proper and efficient way. The evidence will need to show how disclosure of the documents will cause the agency to change the way in which it operates to its adverse effect.

16. There are a number of aspects to be considered in applying the public interest test in section 40. A balance must be struck between them. In favour of release in this case are the following factors:

* The general public interest in obtaining access to government held information.

* Releasing the information will disclose the basis on which competition notices are issued generally or the reasons for the ACCC's decision to issue a competition notice against Telstra.

* The public interest in the public being able to scrutinise the operations of the ACCC and to make its own judgement as to whether the ACCC is discharging its functions properly.

* A factor urged by the applicant was the interest of Telstra whose legal and commercial interests are directly affected by the various notices in having information which illuminates the administrative decision making processes leading up to the making of those instruments and in having information referred to in a media release which preceded the issuing of the competition notice.

17. Public interest factors against the release of all the documents include the following:

* The need to preserve confidentiality, having regard to the subject matter and the circumstances of communications. The respondent submitted that the release of documents would impair the operation of ACCC, which relies on confidential information on market structure, conduct and performance being provided to it voluntarily by private entities.

* The respondent urged the public interest in ACCC being able to continue to obtain comprehensive information and the whole-hearted cooperation from the public including competitors of Telstra (whose complaints led to the litigation) and to carry out its operations effectively and efficiently and not to its disadvantage.

* The public interest in maintaining a process whereby persons (both consumers and businesses) can communicate to the ACCC in the knowledge that the information they provide will not become known by the entity complained against, which entity may be in a position to take retaliatory action; and

* The ACCC being able to carry out its functions under the Trade Practices Act including ensuring compliance with the Act in a timely, efficient and effective way at a reasonable cost to the Australian community.

Notwithstanding the factor peculiar to the interest of Telstra and urged by the applicant as stated above, I do not consider that release of documents under the Freedom of Information Act should in some way be considered as a substitute for discovery in litigation. Where documents are produced to a Court, two consequences follow. Firstly, conditions inter partes may be imposed assuring continuity of confidentiality and access to the documents by a restricted class of persons. Secondly, documents produced to a Court for litigation purposes can be used for those purposes only. It follows that release of documents under the Freedom of Information Act would have potentially a much wider area of publication. Whilst the special interests of Telstra are recognised, it seems to me that, to the extent that they relate to the litigation, those interests should be satisfied through curial interlocutory proceedings.

18. Evidence dealing with the public interest aspect of the claims for exemption was contained in an affidavit of Mr Spier, the chief executive officer of the ACCC. None of this was controverted in cross-examination. As to the Commission's role and its practice of receiving complaints, he said:

"4. The ACCC is the Commonwealth's regulatory agency concerned with consumer protection and competition. The ACCC's mission is to enhance the welfare of Australians by fostering competitive, efficient, fair and informed Australian markets. It is an independent statutory authority and administers the Trade Practices Act 1974 ("TPA"), the Prices Surveillance Act 1983 ("PSA") and other legislation. The administration of the legislation involves both promoting the Commonwealth's consumer protection and competition policies and enforcing the provisions of the legislation. The ACCC does this by pursuing strategies which are intended to lead to improved competition and efficiency in markets and greater adherence to fair trading practices in well informed markets. To carry out its functions the ACCC must be able to obtain relevant market information.

5. The ACCC regularly receives complaints from entities claiming that other entities have been behaving in breach of the TPA. This information is very valuable to the ACCC because it gives the ACCC an insight into what is occurring in the industry as well as the individual behaviour complained of. When the ACCC decides, following a complaint, to investigate a matter further, it routinely asks complainants to assist it by providing further information which is relevant to the matter being investigated. The information provided in response to the ACCC's request will vary from being only the most elementary core information regarding the behaviour complained of, to a vast quantity of information including allegations of the effect that this behaviour has had on the complainant's business affairs and the practices of other entities in that history. All this information is most valuable to the ACCC."

19. The dependence upon complaints by service providers within the industry in the efficient carrying out of the Commission's role was referred to by Mr Spier in these words:

"Turning to each of the types of information noted at paragraph 3 hereof, I say in relation to each of those as follows:

(a) In relation to category 1, that is the business affairs of entities, this information is particularly useful to the ACCC because it allows the ACCC to have a full, comprehensive understanding of the relevant industry and the effect of the alleged anti-competitive behaviour on the complainant as well as other entities in the industry. If the adverse effect on other entities in the industry were limited the Commission may take a different approach from the situation where the adverse effect was substantial. The information received by the ACCC from industry and, in particular, complainants is often extremely commercially sensitive, including information as to marketing strategies, pricing policies, costs of production, profit margins and business plans. If that information were no longer available to the Commission then there is a real likelihood that it would be very difficult for the Commission to judge whether behaviour was anti-competitive or not in breach of the legislation. Without that information there is a real likelihood that the Commission would be unable to set priorities as to which allegations of anti-competitive behaviour should be investigated as a matter of urgency and which matters could wait for a later date. A reduction in the amount or quality of the information supplied would severely prejudice the ACCC in its capacity to investigate or form opinions on allegations;

(b) In relation to category 2, that is the business plans, practices and behaviour of entities in the telecommunications industry, it is essential that the Commission continue to receive full and comprehensive information from the sources that currently provide it. The ACCC relies very much on the whole hearted cooperation of the entities in that industry to provide it with information to assist it to reach a decision under the legislation and more generally in carrying out its functions. This information allows the Commission to be fully informed of what is happening in the industry, so that it can identify anti-competitive behaviour in breach of the TPA and can have early knowledge where anti-competitive behaviour may be occurring. Were the Commission no longer to receive such information then it would need to rely to a greater degree upon its own investigators and intelligence gatherers to obtain this sort of information, or would be unable to obtain this sort of information at all. Without such specific and general background information, the Commission is reasonably likely to have great difficulty in reaching any conclusion as to whether or not anti-competitive behaviour was occurring. Any diminution of the supply of this information would result in a need for much greater spending by the ACCC to gather its own intelligence and this would not be good as actual industry information;

(c) In relation to category 3 information, that is complaints about the problems experienced by service providers with the commercial churn service and the service providers' negotiations and dealings with Telstra, the ACCC relies on the complaint procedure as a significant means of assessing conduct within a market place. Upon receipt of a complaint and a decision to investigate the complaint, it is the ACCC's practice to ask complainants to assist it by providing further information which is relevant to the matters being investigated. The ACCC believes that it is essential to its operation that claimants are able to make complaints without fearing the consequences of disclosure of the complaint or the details of the complaint either to the entity complained against or generally. In my experience, many complainants fear that disclosure could lead to their competitors using their sensitive commercial information to adversely affect them and even reprisals by the entity complained about. This is often the perception of complainants and it is perception which will influence their decisions. Were there to be any reluctance by complainants in coming forward to make a complaint or in providing sufficient and ongoing information responding to ACCC's request then there is a real likelihood that it would be difficult, if not impossible, for the ACCC to become aware that the legislation may be being breached. In the absence of receiving complaints, I believe that many serious breaches of the legislation would go undetected, thereby jeopardising implementation of the Government's consumer protection and competition policies. I believe this would not be restricted to the telecommunications industry but would soon spread to other industries and ACCC functions.

...

The ACCC has a relatively small staff and a huge and growing jurisdiction. When it undertakes investigations it does so in the most cost effective and efficient way. The best information available as to what is happening in a particular industry and the behaviour of the entities opening in that industry clearly will come from those who are in the industry itself. It is for this reason that the ACCC contacts the entities operating in that industry to obtain as much information as possible so that it can determine whether anti-competitive behaviour is occurring. The ACCC needs to consider all the detail received and make a judgement as to whether anti-competitive behaviour is occurring and what action should be taken. It is essential that the ACCC have the most comprehensive and detailed information that it can gather so it can make a properly informed decision. I believe that the ACCC would be severely hampered in its efforts if it were to receive only that information which the entities themselves believe is the core information or the minimum information needed to result in the issue of a section 155 notice. Information obtained voluntarily in the circumstances in which the Commission has always obtained it will be of much greater value to the ACCC than the bare minimum information which is likely to be received under compulsion or given grudgingly in circumstances where the provider of the information believes there is a real likelihood that it will be disclosed publicly, or to an FOI requestor without any fetter upon its use.

The resources and expertise of the ACCC are limited. It has a great variety of tasks that it undertakes in a wide range of markets. If the ACCC is no longer able to obtain comprehensive details of business operations, market share and retailing practices in the telecommunications industry, it will make it more difficult for the ACCC to understand the broader context of the concerns of service providers in that industry and to make a judgement as to whether the behaviour complained of is anti-competitive. The level of detail provided by the other entities in the telecommunications industry greatly assisted the ACCC in carrying out a thorough investigation of commercial churn. Based on my own experience of the industry and the responses received from third party entities during the consultation process in this matter, I believe that disclosure of the information described in paragraph 3, for which exemption has been claimed, would substantially adversely affect both the quality and quantity of similar information which the ACCC might otherwise have expected to obtain from entities in the telecommunications industry in the future."

20. If the conduct of the operations of the agency were adversely affected in a substantial way by the interruption of the flow of complaints through lack of confidence of confidentiality, then the effect would be seriously adverse, as Mr Spier pointed out:

"I believe that the absence of full and detailed information, with the effects listed in paragraph 11, would require the ACCC to change the way in which it operates to its great disadvantage. It would no longer have direct access to the fullest of information in the market place, or in any particular industry, and would not have the whole hearted cooperation of the entities operating in that market place or industry. It would need to rely to a greater degree on its own intelligence. This would require the engagement of a large number of investigators or consultants to gather intelligence surreptitiously and to pass that information along to the ACCC. This would be very expensive, inefficient and intrusive. It would also, I believe, have the effect of making members of an industry very wary or suspicious as they would not know what information about their own operations was being collected by the ACCC. In addition, were the ACCC no longer able to rely on receiving complaints to alert it to possible anti-competitive behaviour in the telecommunications or any other industry, the ACCC would have to incur considerable expense in employing inspectors, auditors and investigators to ensure compliance with the legislation. The number of unlawful practices that could be investigated and remedied by the ACCC could reasonably be expected to substantially decrease as persons adversely affected by such conduct will be les likely to report the matter to the ACCC or provide sufficiently detailed information to allow the ACCC to take remedial action.

...

I understand that there is a public interest in the public being able to scrutinise the operations of the ACCC and to make its own judgement as to whether the ACCC is discharging its functions efficiently and properly, and that the release of information will assist in providing an understanding of the basis upon which competition notices are generally issued, as well as the reasons for the ACCC's decision to issue a competition notice against Telstra in this instance. However, I believe that the public interest in the ACCC being able to continue to carry out its functions in an efficient and cost effective way far outweighs the public interest in scrutiny. Where litigation results from the issue of a competition notice, the entity proceeded against is given access to all necessary information by way of discovery and due process is observed. The ACCC is currently involved in legal proceedings against Telstra in the Federal Court to enforce competition notices issued against Telstra. In these proceedings the ACCC has made discovery of the documents in its possession relevant to the issues in dispute between the parties. Because of the commercial sensitivity of some of these documents, Telstra has only been able to inspect certain documents on the basis of confidentiality undertakings restricting access to specific legal advisers, consultants and staff of Telstra. The ACCC has given similar undertakings to Telstra in relation to the inspection of Telstra's discovered documents. This course of action was agreed between the ACCC and Telstra."

21. Mr Spier was cross-examined on the contents of his affidavit. His evidence, however, was unshaken. In my view, a strong case has been made out on balance that disclosure of any of the material for which exemption is sought would not be in the public interest.

22. In this case, the exemption claimed under paragraph 40(1)(d) is closely linked to the exemption claimed under paragraph 43(1)(c)(ii) in that any decline in the future supply of information to the agency could reasonably be expected to have a substantial adverse effect on the conduct of its operations. The evidence of Mr Spier is strongly supportive of the reasonableness of such an expectation (per Sheppard J in Attorney-General and another v Cockcroft 64 ALR 97 at 109).

23. There is no modified public interest test for this exemption but there must be a reasonable expectation of prejudice (Re Angel and Department of Arts, Heritage and Environment 9 ALD 113). There may be an indirect public interest test involved in measuring the reasonableness of the expectation. In Searle Australia Pty Limited at 178, the Court said:

"If it be in the public interest that certain information be disclosed, that would be a factor to be taken into account in deciding whether a person would be unreasonably affected by the disclosure; the effect, though great, may be reasonable under the circumstances. To give two examples: if the relevant information showed that a business practice or product posed a threat to public safety or involved serious criminality, a judgment might be made that it was not unreasonable to inflict that result though the effect on the person concerned would be serious. Of course, the extent and nature of the effect will always be relevant, often decisive. Whether the effect of the disclosure is unreasonable cannot be assessed without taking into account all relevant factors: Colakovski v Australian Telecommunications Corporation (1991) 100 ALR 111 at 120-1, 123-4."

24. As is evident from the affidavit of Mr Spier, the Commission largely depends upon the whole-hearted cooperation of suppliers of information in order to carry out its functions effectively. The degree of dependence placed on this information greatly assists in determining that its absence will present a real likelihood of prejudice (Re Drug Houses of Australia and Corrs Pavey Whiting & Byrne and Department of Health 14 ALD 244). The section is concerned not only with information from sources named in the documents in dispute, but also with all other sources in the future. Paragraph 43(1)(c)(ii) looks directly to the future supply of information from any source and postulates an expectation of prejudice in the supply of that information if the release of information from source A may create a perception in the mind of source B that its information will also be released (Re B and Brisbane North Regional Health Authority (1994) 1 QAR 279). I was referred to this case by counsel for the respondent. Although it deals with the 1992 Queensland legislation, the long and detailed reasons for decision given by the information commissioner provide a general useful review of applicable principles.

25. Having regard to all these general principles I turn now to the specific documents in issue. Document 19A is a letter from a firm of solicitors acting for AAPT Limited (one of the complainants mentioned in paragraph 2 of the request) in response to an invitation to its client by the Commission. That invitation is not one of the documents for which exemption has been claimed. The response however, a four page letter together with an attachment which was subsequently released, contains information clearly given to assist the Commission in the conduct of its operations and, in particular, in the conduct of its litigation with the applicant in the course of those operations. Evidence was given by Mr Dewstow, the Director of Carrier Relations of AAPT Limited, setting out the reasons why his company, as the supplier of the information, wished it remain confidential. Evidence was also given by Mr Cosgrove, the General Manager of the Telecommunications Group of the ACCC, concerning the circumstances under which the document was subsequently located after the review decision had been made and the way in which it had come into existence.

26. In my view, disclosure of this document would reasonably be expected to shake the confidence of participants in the telecommunications industry that complaints and information given in confidence could be disclosed. In its own terms the letter implies a willingness to assist on a confidential basis. If this basis is subverted, a future willingness cannot be assumed and in the absence of any such information, the carrying out of its statutory functions by the ACCC could reasonably be expected to be seriously prejudiced.

27. The public interest argument put in Mr Spier's affidavit shows, on balance, that disclosure would not be in the public interest. The factors against disclosure are markedly stronger than the factors for release. The involvement of the applicant in litigation against the respondent does nothing to strengthen the applicant's assertions of the benefit of public interest being in favour of disclosure.

28. Document 28 can be considered with document 39. Both are internal minutes and in both of them, exemption is sought only in relation to small portions. Document 28 is a minute from Commission officers to the telecommunications committee. Document 39 is a minute from a Commission officer to Mr Jones who was then a Senior Economic Consultant to the Commission. Most of each of these two documents has been released to the applicant. Document 28 is an internal minute to the Commission's telecommunications committee concerning Telstra's commercial churn procedures and views on a "reason to suspect". The minute provides information on general background, Telstra's new churn arrangements, debt arrangements, transfer reject costs, complainants submissions and the possible treatment of legislative issues such as market definition and the misuse of market power. The passages for which exemption is claimed are two non contiguous paragraphs which set out information received from carriage service providers concerning their margins, customers and business practices in response to the other material contained in the background information in the minute.

29. Document 39 is an internal minute regarding local call resale and Telstra's commercial churn. The minute outlines complaints made to the Commission about Telstra's commercial churn service and gives background on the process. It discusses local call resale and provides details of the Commission investigation in respect of such areas as debt severance fees, transfer rejections, Telstra's response and the effect of such conduct. It also discusses the relevant legislation and provides some market analysis.

30. The passage for which exemption is claimed consists of one paragraph based upon information given by service providers.

31. In both cases it is clear that the information was passed to the Commission in the context of a series of communications about a particular investigation. Those communications were generally confidential, as might be expected having regard to the nature of the investigation and the nature of the participation by the service providers in the course of that investigation.

32. The proper and efficient conduct of the Commission's operations include the proper and efficient conduct of the enforcement proceedings which it has initiated in the Federal Court as part of its statutory obligations. The conduct of those operations is substantially enhanced by the Commission being able to undertake communications with relevant third parties. All the evidence pointed to the fact that the Commission was particularly dependant upon the cooperative involvement of those third parties in its investigations and in its proceedings. The passages in the minutes to which I have referred contain information which was voluntarily supplied by competitors of the applicant whose allegedly anti-competitive conduct is the subject of the investigation. The importance of cooperation is emphasised by the fact that the litigation has not been concluded.

33. Document 35 may be considered with document 99. The former is a typed file note in relation to discussions held on 6 December 1997 between officers of the Commission and officers of Primus, one of Telstra's competitors, on a range of local call issues including debt inheritance, SPORT, total services, cost of churning and end user, cost margins and administrative churn problems.

34. Document 99 is a typed and signed file note arising from a video conference between officers of the Commission on 13 February 1998 and officers of AAPT Limited concerning such issues as one bill, market share, line ownership, provisioning and market research. Although it may well be the case that Telstra could make an educated guess as to the attitude of AAPT to these particular subjects, it is clear from the document itself and from other evidence that AAPT would object to the release of the document as a document. Although a full process of consultation has taken place, the evidence established that no document was released to Telstra containing information from any of the competitors unless each of the relevant competitors consented. As this document has not been released, one can assume that any release would be contrary to the wishes of AAPT, even though a consistency exercise has not been carried out.

35. In many ways it is the fact of the release of a document recording this information, rather than the information itself which is crucial. Both section 40 and 43 speak of disclosure of the relevant document. The claim under subsection 40(1)(d) is not dependent upon the confidential nature of the information, although I have no doubt that the information in these two documents was regarded by all parties as confidential. The release of the document containing such information, however, whether or not the material had been deliberately or accidentally made known to the applicant, could reasonably be expected to have a substantial adverse effect in the future on the way in which the Commission gathers its information in the telecommunications field and carries out its regulatory duties.

36. Documents 63 and 75 may be considered together. Document 63 is an internal Commission document described as an evidence matrix, prepared during the commercial churn investigation. It describes such matters as the particular conduct being investigated and the legislative requirements that constitute the proscribed conduct. The document is organised in part according to the various sources which have provided particular information. The matrix sets out the evidentiary matters that are required, the lines of investigation that might be pursued and the legal and other issues which will need to be considered. The portions for which exemption is sought are based upon information given by Macquarie Corporate and AAPT. Evidence was given by officers of both of those companies detailing their objections to the release of that information.

37. Document 75 is a further evolution, advancement and refining of document 63 to reflect the further investigation and deliberation which had been devoted to the relevant matters in the interim. It consists, for the most part, of document 63 with the addition of further material in a number of areas. Once again, the passages sought to be excised are based on information from Macquarie and AAPT, both of whom object to the release of those portions of the document.

38. The information is clearly commercially sensitive and, as the evidence showed, was communicated in confidence. Whether or not Telstra knows what that information consists of, the betrayal of the confidence by the ACCC could reasonably be expected to hamper its operations in the future and could reasonably be expected to cause a drying up of the supply of information in the future, not only from those two companies but from all other operators in the telecommunications field.

39. Document 179 is in a different category. It is a letter from Optus in response to an invitation from officers of the Commission commenting on the form and substance of a competition notice. Accompanying the letter are 17 pages headed 'Discussion Paper' but consisting principally of legal analysis and submissions and two suggested forms of competition notice. The paper reviews the history at that date of the litigation between Telstra and the ACCC in relation to a competition notice which was withdrawn after apparent recognition of its defects. The paper then goes on to argue propositions supporting the construction of other competition notices which are appended as examples.

40. Mr Suckling, the group manager of regulatory affairs of Cable and Wireless Optus, said in his affidavit:

"16 I have considered document 179, which contains submissions by Cable and Wireless Optus to the Commission on the proposed form and content of a competition notice. It contains Cable and Wireless Optus' comments on potential Telstra conduct and contains strategic legal advice and commentary on the local access resale issue. It contains lines of argument that may be made by Cable and Wireless Optus in relation to the issue and in relation to enforcement of a competition notice.

17 I believe information provided to the Commission outlined in paragraph 16 of this affidavit, on these more general regulatory matters, touches on Cable & Wireless Optus' business and the commercial affairs in that Cable & Wireless Optus spends a considerable amount of time and expense in developing sophisticated regulatory arguments and positions. Other players particularly smaller competitors who have not invested equal time or information in the regulatory process or procedures would therefore be unduly advantaged, to Optus' disadvantage, by the investment that Optus has made in its regulatory procedures by adopting these arguments. In some cases these regulatory arguments also foreshadow the line that Optus will take in commercial negotiations on these issues which would enable competitors to structure their negotiations in the knowledge of these arguments.

18 In addition the information referred to in paragraph 16 of this affidavit, was provided to the ACCC in response to the ACCC's request for information on the regulatory impact and other issues associated with the potential issuing of a competition notice. These requests were made in the context of a procedure where the Commission stated that information provided to it in relation to these areas would be regarded as confidential and only to be used for the purpose of the Commission's decision as to the issue or non issue of a competition notice. If these documents were not to be treated in the confidential manner that they would be treated in, Cable & Wireless Optus' ability to provide further assistance to the Commission in relation to these matters in future would be jeopardised."

41. In cross-examination, he agreed that the submissions on the form and content of a competition notice were sent with a clear expectation or hope that those submissions would be acted upon by the ACCC. In those circumstances, Telstra submitted that the document was inherently incapable of being a confidential document. It submitted that whether or not the Commission did in fact accept and act upon any of Optus' submissions was beside the point.

42. Prima face there is merit in this submission in relation to this particular document. Nevertheless, in my view, it is the release of the document as a document that underpins the reasonable expectation of adverse results contrary to the public interest. Responding to a request from the Commission, Optus was entitled to put forward its reasoned legal approach. It cannot be said that any submission from an industry participant intended to be acted upon is therefore incapable of being a confidential document. All suppliers of information, no doubt, hope or expect that their material will reappear in some enforcement or regulatory situation. To accede to Telstra's general submission would be to deprive any such communication of the necessary quality of confidentiality. I have considered the submission only in relation to this particular document and have concluded that it ought not to be released, notwithstanding the nature of its contents.

43. The document was put forward in the context of an ongoing investigation. Optus has put its not inconsiderable resources at the disposal of the Commission. Notwithstanding its agreement to the release of other documents and other information which it has supplied, it has resolutely refused to agree to have this document released. That refusal must be taken seriously, particularly as the investigation with which it is concerned and the subsequent litigation have not yet been concluded.

44. The fact that some of the submissions suggested by Optus may be made in public in the course of litigation does not detract from their confidentiality in the context of an offer of intellectual assistance during the course of a preceding investigation. The Commission has a strong public interest in receiving assistance in any form from industry participants.

45. Optus claimed some commercial value in the information and regarded it as a genus of intellectual property. On the basis of this evidence, the respondent added a claim for exemption based upon paragraph 43(1)(b). In my view, the evidence was not strong enough to support reasonable expectation of a commercial value or a diminution of that value if one existed. It was strong enough, however, to support a claim based upon section 43(1)(c)(ii).

46. I considered whether section 22 could be applied. The introductory paragraphs to the discussion paper recount the historical background as it then appeared (16 July 1998) in the litigation between Telstra and the ACCC and the demise of the original competition notice. This information, being of a public nature, might possibly be regarded as different from the further discussion as to future strategy. The paper does, however, contain speculation and non-historical material inextricably mixed with a recital of the facts. It would therefore not be possible to delete portions of this part of the document leaving it in any sensible or intelligible form.

47. In discussing the issue of particulars in any hypothetical competition notice, the document quotes extracts from decided cases, the explanatory memorandum for the legislation and some of the transcript of the proceedings before Goldberg J. All this material is in the public domain. Once again, however, if this was the only material to be left in an excised version of the discussion paper, there would not be an intelligible result. In any event, it is doubtful whether Telstra would wish to have access to such a copy (as contemplated by subsection 22(1)(c)) as the information is readily available on public records.

48. It is of particular value to the Commission to receive documents of this nature to assist it in the conduct of its operations as the legislation it is charged to enforce is not only recent, but is of a novel character. Although the Commission has access to its own legal advice, documents of this nature are of particular value because they come from parties whose interests are served by efficient regulation and, if necessary, efficient conduct of enforcement litigation in realising the anti-competitive ideals of Part XIB. It follows that the absence of such assistance would have a substantial adverse effect on these operations.

49. For these reasons, the decision under review is affirmed.

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B.J. McMahon (Deputy President)

Signed: J. Healy .....................................................................................

Jacqueline Healy, Associate

Date/s of Hearing 17, 18, 19 and 20 January 2000

Date of Decision 7 February 2000

Counsel for the Applicant Dr J Griffiths

Solicitor for Applicant Ms J Wharton, Mallesons Stephen Jaques

Counsel for the Respondent Mr K Bell QC

Solicitor for the Respondent Ms M Campbell, Australian Government Solicitor