Swedish commission says ride-sharing services should not be profit-making

STOCKHOLM (Reuters) - Sweden proposed rule changes for its taxi sector on Wednesday that may help ride-hailing services like Uber Technologies in the long term, but also recommended that profit-making ride-sharing should be illegal.

A government-appointed commission said that Sweden should allow taxis to do away with expensive meters, making it easier for drivers to use their own cars - a development that has helped firms like Uber undercut traditional services in other countries.

Uber, which has faced setbacks in other parts of Europe, already offers taxi services in Sweden, but has to comply with the same regulations as other market players.

The commission's proposals would, however, only allow use of unmetered cars if they are pre-booked and connected to a booking hub, which needs to collect data for tax authorities to use.

It also recommended that profit-making ride-sharing services, like UberPOP - recently suspended in Sweden - should be illegal.

"This confirms that ride-sharing is different from driving other people at a charge," Sweden's infrastructure minster Anna Johansson told a press conference.

Sweden, which deregulated its taxi sector almost three decades ago, decided last year to look at how to adapt its taxi and ride-sharing regulations.

Uber, which launched in Europe five years ago, has faced fierce opposition from regular taxi companies and some local authorities who fear it creates unfair competition because it is not bound by strict local licensing and safety rules.

Supporters however say rigid regulatory obligations protect incumbents and hinder digital startups which offer looser arrangements to workers looking for more flexibility, albeit without basic rights.

Uber is currently seeking to convince Europe's top court that it is a digital service, not a transport company, in a case that could determine whether app-based startups should be exempt from strict laws meant for regular companies.

It has been forced to suspend its UberPOP service, which relies on non-professional drivers using their own vehicles, in Sweden, Germany, France, Italy, Spain and Belgium.

(Reporting by Helena Soderpalm; Editing by Ruth Pitchford)