Egypt clears Uber's acquisition of Careem with conditions
Egyptian authorities gave the go-ahead for Uber's acquisition of Dubai-based ride-hailing app Careem after imposing a set of conditions, clearing a key regulatory hurdle for the $3.1 billion (Dh11.3bn) deal.
The Egyptian Competition Authority (ECA) stipulated terms, including capping annual fare increases and surge pricing, after studying the deal's impact on the local market, the regulator said in a statement on its website on Sunday.
"ECA has imposed commitments on Uber, which Uber has agreed to comply with, which will safeguard the rights of riders, drivers and investors, as well as encourage innovation and entry on to the market," the authority said.
“We welcome the decision by the Egyptian Competition Authority to approve Uber’s pending acquisition of Careem,” an Uber spokesman said in an emailed statement. “Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers and cities across Egypt."
San Francisco-headquartered Uber's purchase of its UAE-based rival Careem in March marked the region's biggest technology sector acquisition to date. Both companies have operated since 2014 in Egypt, the Arab world's most populous nation, offering services including passenger vehicles, buses and deliveries.
The ECA made its decision after studying the impact of the acquisition on the Egyptian market, in which it scrutinised data from 270 million trips, a consumer survey, Egyptian and international precedent and ongoing co-operation with its counterparts in other countries.
The competition watchdog identified certain barriers that mean the transaction could lead to increased prices, decreased consumer choice and increased risk for new competition. To mitigate these effects, the companies proposed a series of commitments that the ECA will impose on the company.
Under the commitments Uber made to the regulator, it must comply with a cap on price increases that is lower than the rate before the acquisition. It must also limit surge pricing, where rides temporarily become more expensive due to increased demand, at up to 2.5 times the normal trip cost.
Uber must also not increase the commission they deduct from drivers beyond the current rate.
The companies will encourage the entry of new competitors by allowing them to access Uber’s mapping and trip data and permitting them to get user data from Uber and Careem apps after obtaining users' consent.
To encourage effective competition in adjacent markets, the companies must also commit not to price their high-capacity vehicle services below cost.
The commitments will last for five years, or until the entry of a "meaningful market player", and will be overseen by an independent monitoring trustee to ensure compliance, the ECA said.
Uber's acquisition of Careem is expected to close in early 2020, depending on regulatory approvals in the various countries the companies operate, of which Egypt is a key territory. The North African country, with a population exceeding 90 million people and an overstretched transport infrastructure, is the biggest market for ride-hailing services in the Middle East.
Approvals for the deal have been granted in the UAE, Jordan, Saudi Arabia and now Egypt, according to Uber.
The companies are also working with the relevant antitrust authorities to secure outstanding approvals in Pakistan and Morocco.