Court Says Pricing Disclosure Would Violate FOIA

The Air Force received a request under the Freedom of Information Act to disclose GE’s unit prices in an award of two contracts for spare parts but GE opposed the disclosure asserting it would cause substantial harm and fell under the FOIA Exemption 4. Exemption 4 protects privileged and confidential information obtained from a person if they can demonstrate either the disclosure would likely impair the government’s ability to obtain necessary future information or cause substantial competitive harm. The Air Force claimed (1) GE failed to show it faced actual competition and hence faced no competitive harm (2) failed to articulate the nature of the competitive harm (3) customer leverage is not itself recognized as competitive harm for FOIA Exemption 4 and (4) GE’s unit pricing would not give GE customers leverage over the company in their own contracts.

The Court originally sided with the government but then reversed their decision stating the government’s reasons were contrary to prevailing law or unsupported by the evidence. GE adequately demonstrated it faces actual competition over jet spare parts to both future contracts with the Air Force and contracts with other countries. The Court explained GE had the burden of producing evidence that release of pricing information would cause competitive harm but did not need to demonstrate precisely how the disclosure would cause the harm. As for customer leverage, the DC Circuit court had expressly ruled that customer leverage was potentially harmful and therefore was the basis for nondisclosure. Finally whether or not its customers would have leverage against GE was found to be irrelevant where the Court stated its customers would likely use the disclosed information to demand lower unit pricing if the disclosure was made (General Electric Co v Dept of Air Force, DDC No 1:01-cv-01549).

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