Bloomberg/Christopher Pikeby Kudakwashe Muzoriwa
The Egyptian Competition Authority (ECA) has approved Uber Technologies’ $3.1 billion acquisition of Dubai-based Careem after agreeing to a set of commitments proposed by the US-based ride-hailing service meant to reduce harm to competitors, reported Reuters.
The deal is expected to close in January 2020, depending on regulatory approval in various territories of which Egypt is among the most significant. Egypt, with a booming population seen swelling to 100 million, is the biggest in the Middle East for ride-hailing services.
Under a series of commitments Uber has made to the ECA, the San Francisco-headquartered company has agreed to abandon exclusivity provisions with partners and intermediaries as well as reduce barriers to entry into the market.
Additionally, an independent monitoring trustee will be nominated by Uber and approved by the ECA to ensure adherence to the commitments. Uber will share random samples of trip data with the trustee monthly to ensure compliance.
The commitments must be adhered to for five years from the date the transaction closes or when one or more ride-hailing providers achieves 20 per cent of weekly rides individually or 30 per cent collectively in overlapping areas excluding Cairo and Alexandria, Egypt's biggest cities.
Furthermore, excluding surge pricing and promotions, Uber will cap its yearly fare increases beyond inflationary costs at 10 per cent for Uber X and Careem GO, the most popular services in Egypt.
Similarly, Uber and ECA agreed that surge pricing will also be capped on Uber X and Careem GO at 2.5 times. Surge prices will be applied to a maximum of 30 per cent of annual trips on the two services.
Careem will become a wholly-owned subsidiary of Uber but will continue to operate as an independent brand with independent management.