1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

The Czech Search for Collective Action Instruments: Expected Impacts on the Automotive Industry Petr Frischmann ŠKODA AUTO University Department of Law and Economics Na Karmeli 1457, Mladá Boleslav, 293 01 Czech Republic e-mail: petr.frischmann@savs.cz

Abstract The present text addresses the theoretical problems of the implementation of compensatory collective redress legislation in the Czech Republic. The article reflects the current progress of the legislative effort achieved, focusing on the principal questions of the justifiable scope of application, role of consumer organisations, the financing of class actions or the issues of disclosure and protection of confidential information. Attention is paid to the potential risks of the applicability of both the opt-in and opt-out systems with the assessment provided for the impact of future legislation on the automotive segment. The analysis illustrates key factors, limits and risks of the current legislative search for the optimum balance between the consumers’ protection and safeguarding principles preventing the major risks of misuse of both the representative and collective compensatory actions in the Czech Republic. Keywords: collective action, compensation, NGO, opt-in, opt-out, representative action JEL Classification: K21, K41, K42 1. Introduction The position of the individual consumer in litigation against the corporation is not the easy one. The difficulties are not only arising from the immanent information asymmetry or lack of experience. The economic risk factor is predominant. The consumer is bearing the risks of financial losses of the unsuccessful litigation. Even in the potentially successful cases the limiting economic factors (such as the time consuming litigation involving the costs of lawyers, expert witnesses and other expenses) produce rational hesitation for involvement in litigations. The rational apathy level is high especially in the cases of the minor value. The above factors are frequently abused by corporations relying on the rational apathy of consumers. In order to provide for the remedy, the means of collective legal redress are unifying the injured consumers into the joint action, granting special procedural rights, limiting costs, largely eliminating risks and improving the overall level of the consumers´ protection. The efficient consumer protection policy in this respect, however, requires the adequate legislative procedural tools. The long history of US class action experience significantly affected the European legislative effort and EU member states are currently gradually implementing the respective national legislations. The Czech Republic, however, belongs to a minority of

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