Newspapers lose appeal in brewing shares case

News organisations which unwittingly played a major role in creating false markets in the shares of two brewing companies today lost their appeal against a High Court order forcing them to hand over documents.

The order was obtained last December by Belgian beer giant Interbrew which is trying to track down the person who leaked to the financial press doctored copies of price-sensitive documents relating to a possible takeover bid for South African Breweries.

Resultant publicity led to a fall in the price of Interbrew shares and a rise in SAB shares and the volume of trading in them. Interbrew was forced to defer any decision on whether to mount a bid.

In the High Court, Mr Justice Lightman said the "public interest" right of the media to protect their sources of information was substantially weakened in this case because the unknown source had "sought to deceive and manipulate the press to achieve his criminal objective, namely to rig the market".

Granting an order against the Financial Times, Independent, Guardian, Times and Reuters, he said: "No fair-minded observer could reasonably take the view that a person, acting as the source has in this case, would be protected from identification by press privilege."

Today, the Court of Appeal dismissed a challenge by the newspapers and Reuters, but agreed to suspend operation of the order pending an application for leave to appeal to the House of Lords.

Lord Justice Sedley, sitting with Lords Justices Ward and Longmore, said the media's public interest rights were overriden in this case by the no less important public interest in effective justice.

Interbrew was entitled to the documents because they could help identify the prospective defendant to a breach of confidence action.

What mattered critically was the source's evident purpose.

"It was on any view a maleficent one, calculated to do harm whether for profit or for spite and whether to the investing public or Interbrew or both," he said.

"The public interest in protecting the source of such a leak is not sufficient to withstand the countervailing public interest in letting Interbrew seek justice in the courts against the source."

The judge added: "There is no public interest in the dissemination of falsehood.

"While newspapers cannot be asked to guarantee the veracity of everything they report, they in turn have to accept that the public interest in protecting the identity of the source of what they have been told is disinformation may not be great."