BRUSSELS, June 17 (Reuters) - Sweden should reduce its aid to large metropolitan newspapers and put a cap on operating costs to bring government assistance to the press in line with EU rules, the European Commission said on Wednesday. The Commission, which regulates state aid in the 27-nation European Union to ensure fairness, said it was not questioning the objective of media pluralism pursued by Sweden.
"However, the Commission considers that some amendments to the aid scheme are necessary in order to avoid disproportionate distortions of competition and trade," it said in a statement.
The Commission launched an investigation in November 2008 following complaints and found that the press assistance scheme in place since 1971, before Sweden's accession to the European Union, constituted state aid.
"Running a newspaper is also a commercial activity and the Commission has a duty to prevent undue distortions of competition and trade resulting from public subsidies," EU Competition Commissioner Neelie Kroes said in the statement.
"The current economic climate has serious negative implications for the written press, especially for newspapers that do not receive aid," Kroes added.
The Commission proposed a gradual reduction in aid ceilings for large metropolitan newspapers and a cap on operating costs.
Sweden has to inform the Commission within three months -- which may be extended -- whether it can agree to the proposed amendments. Failing an agreement, the Commission may open a formal state aid investigation. (Reporting by Bate Felix, editing by Dale Hudson)