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

Venus Wu and Sijia Jiang

* Rare criminal case against Uber drivers

* Several Asian countries taking tough line against Uber

* Drivers appeal verdict

(Adds more details of charges, background)

HONG KONG, March 10 (Reuters) - A Hong Kong court on Friday

found five Uber drivers guilty of illegally offering

ride-hailing services, the latest clampdown against Uber

Technologies Inc's 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 licences 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.

"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)