ECA approves ‘under conditions’ Uber-Careem acquisition deal

Mohamed Alaa El-Din
5 Min Read

The Egyptian Competition Authority (ECA) approved on Sunday Uber’s acquisition of Careem. With this step, the deal is expected to be executed at the beginning of 2020, Uber said in a press statement.

The multinational ride-hailing company added in the statement that the acquisition agreement between Uber and Careem, which was inked in March, will now come into effect.

According to the company, the completion of this deal will lead to uniting the efforts of Uber and Careem to provide exceptional services that will benefit both passengers and drivers across Egypt.

Uber believes that the acquisition deal will contribute to increasing the efficiency of transport services in the country. It will also contribute to enhancing opportunities for emerging entrepreneurs in the Middle East to reach a broad base of local and global investors.

The deal also represents a large and long-term investment in Egypt by one of the world’s leading technological companies, which reflects a clear global acclaim for the comprehensive investment environment in the country and its openness to innovation and its ability to diversify beyond the traditional sources of foreign investment.

Amir Nabil, head of the ECA, said the deal was approved under some obligations and controls.

Those controls aim to ensure the competitive environment in the local market, preserve the rights of users, including passengers, drivers, and owners of small and medium-sized companies, and enhance the opportunities for expansion of current and potential investments.

The ECA said there are obstacles that hinder companies from entering the market: difficulty of achieving short-term profitability, obtaining finance, attracting drivers and passengers, brand loyalty, and obtaining the necessary data to work in the market.

Without tight controls for the Uber-Careem agreement, it will lead to the following damages: increased prices, low-quality service, fewer options to consumers, absence of innovation, and affecting relevant markets.

Therefore, the ECA decided to obligate both parties to the following:

1- Controls for the protection of passengers

Setting a fare cap (the maximum you can pay in a single trip), so that the rate of increase should be less than previous years.

Setting a limit for the surge factor during peak times, not to exceed 2.5 times the original price, and the trips to which this factor applies shall not exceed 30% of the total trips.

Maintaining the driver’s payment of each ride within 60-80%.

Commitment to innovation and high-quality service

2- Controls for the protection of drivers

Maintain the maximum service fee at 22.5% for UberX and average 25.5% for Careem Go.

3- Controls to protect the market and encourage investment

Modifying the brand of Careem in Egypt to show that Uber and Careem are related entities, to achieve transparency, which increases the possibility of entering new competitors and reduces the marketing budget of other market players.

The ECA has the right to obtain the necessary data of ridesharing and ride-hailing companies according to objective criteria determined by Uber. These data will include: maps, trip data, information about passengers and drivers after their approval, and allowing transfer of personal data from Uber platform to other platforms to improve their experience and enable the competing application to provide a high-quality service suitable for the consumer (data portability).

4- Obligations related to the market, including Uber is obligated to no exclusionary tying.

Uber is also committed not to price the Uber Bus and Careem Bus at a lower rate than the predatory one, which will ensure the market growth and the survival of the existing competitors.

5- The supervisory mechanism for implementation, which includes: To ensure the parties’ commitment, an independent “watchdog” will be appointed to monitor Uber’s compliance with the controls and obligations (Monitoring Trustees).

The agreement is automatically renewable for a period of five years or until an effective player enters the market, and the ECA will review the compliance of the parties with the obligations and controls every two years.


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