Hong Kong Uber drivers found guilty of illegal car hire, latest blow to firm

[March 10, 2017]  By Venus Wu and Sijia Jiang

HONG KONG (Reuters) - A Hong Kong court on Friday found five Uber drivers guilty of illegally offering ride-hailing services, the latest clamp down against Uber Technologies Inc's [UBER.UL] operations in Asia and a rare case where drivers have been found criminally liable.

Authorities in several Asian countries are taking a tougher stance against the San Francisco-based firm, amid growing complaints from traditional taxi drivers who say Uber drivers are not properly registered nor insured.

Uber pulled out of Taiwan less than a month ago over mounting fines from regulators, while Thai authorities have cracked down on drivers following protests from unhappy taxi firms.

The five were convicted for not having proper licenses and insurance to operate vehicles for commercial purposes.

"Members of the public may find the innovative mode of transport very attractive," Judge So Wai-tak said while issuing the sentence.

"However, any private car service with the aim of carrying members of the public as passengers must be regulated and put under control, otherwise the interest and safety of passengers might be compromised."

The judge said he didn't see much difference between Uber drivers and "pirate taxi drivers in the past."

The court fined the drivers HK$10,000 ($1,287.91) each. It also revoked their driving licenses for a year, but that punishment was suspended upon the drivers' appeal.

Uber said it was disappointed with the verdict.

"Sharing a ride shouldn't be a crime," said Kenneth She, General Manager for Uber in Hong Kong, adding the firm would continue to promote ride-sharing services in the city.

"Hong Kong's current transportation regulations have failed to catch up with this new reality and now risk reducing choice and competition."

CHILLING EFFECT

The ruling is seen having a chilling effect on Uber drivers in Hong Kong, experts said.

Kenneth She, Uber's General Manager in Hong Kong, speaks to journalists after five Uber drivers were found guilty of illegally using their vehicles for commercial purpose, in Hong Kong, China March 10, 2017. REUTERS/Bobby Yip

"The court's ruling today is likely to have a short-term deterrence effect on Uber drivers in Hong Kong, as we have seen recently in Taiwan," said Mimi Zou, a law professor with the Chinese University of Hong Kong, without elaborating on its expected impact.

"Hong Kong is one of the rare cases in jurisdictions around the world where the drivers have taken on this criminal liability instead of civil claims," she said.

The Hong Kong police told Reuters it attached great importance to illegal car-hiring cases, and would continue to take action to enforce the law.

Uber told Reuters over 1 million people in the city of 7.3 million have downloaded the app, while tens of thousands have registered as drivers.

The company has had a bumpy ride in Asia after facing similar legal scrutiny as well as fierce local competition in a number of markets.

It sold its China business to local rival Didi Chuxing in August 2016 after an intense two-year battle when Uber was estimated to have lost $2 billion.

In Korea and Japan, where private car-hailing is banned, Uber had to adjust its business models and relinquish significant market opportunities.

($1 = 7.7645 Hong Kong dollars)

(Reporting by Venus Wu and Sijia Jiang; Editing by James Pomfret and Randy Fabi)

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