SMEs "Class Action Law Has Significant Side Effects and Limited Consumer Compensation Effectiveness"

Junggi Joonganghoe Submits Opposition Statement to Ministry of Justice Against Enactment of Class Action Act

[Asia Economy Reporter Kim Jong-hwa] The Korea Federation of Small and Medium Business (KSMB) announced on the 9th that it submitted an opinion letter opposing the enactment of the Collective Litigation Act to the Ministry of Justice on the 6th.

In the opinion letter, KSMB stated, "If the Collective Litigation Act is enacted, small and medium enterprises (SMEs) with limited financial resources and weak legal response capabilities may face bankruptcy," and added, "The collective litigation system should be selectively introduced in individual laws and the requirements for litigation approval should be strengthened to prevent frivolous lawsuits."

In particular, it pointed out, "The consumer damage relief effect of the collective litigation system is not significant, and if companies' legal response costs increase, consumer welfare may actually decrease," and "Unlike the United States, Korea has strict public sanctions such as administrative supervision and criminal procedures, so additionally introducing a strong U.S.-style collective litigation system is excessive."

Earlier, from the 12th to the 23rd of last month, KSMB conducted a survey titled 'SME Opinions on the Expansion of the Collective Litigation System' targeting 500 consumer goods SMEs, revealing that 68.8% of the responding SMEs opposed the Ministry of Justice's plan to expand the collective litigation system, which was announced for legislative notice on September 28.

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