Egypt’s competition watchdog, the Egyptian Competition Authority (ECA), has approved Uber’s acquisition of Careem with conditions, it announced in a statement earlier this week. With the announcement, Egypt has now become the third country to approve this deal with the United Arab Emirates & Jordan being the first two. Qatar is the only country that has blocked the deal so far.
The approval by ECA, even though it comes with some conditions, is a big win for both Uber and Careem as the authority has been one of the most vocal critics of the merger between these two companies.
“ECA has imposed commitments on Uber, which will safeguard the rights of riders, drivers, and investors, as well as encourage innovation and entry into the market,” the Egyptian competition watchdog said in a statement.
Both Uber and Careem according to the statement will have to comply with a cap placed by ECA if they want to increase the fares. The cap, ECA, said is lower than the increase rate prior to the transaction. ECA has also capped the surge (or peak pricing) at 2.5 and its occurrence at 30 percent of the annual trips, with the authority reserving the right to intervene and lower the threshold at any point.
“In order to ensure low prices, the parties should maintain driver utilization rate within a 60-80% range. Commitments regarding safety and quality, placed in addition to the existing ride-sharing laws, will ensure that the quality of vehicles is checked more regularly. Commitments relating to innovation will ensure that new safety features will be added to the Egyptian market,” the statement added.
The statement does not point out but the executive summary of assessment and commitments by ECA (available as a PDF here) explains that almost all the commitments to safeguard consumer interest are for Uber X and Careem Go car types. This suggests that Uber and Careem will have a free hand for all the other vehicle types including Uber Select and Careem Go+ (relatively better cars than the cheapest car options).
The two companies will also not be able to increase the commission that they deduct from the earnings of the drivers driving Uber X or Careem Go (only).
Both Uber and Careem will also be required to remove exclusivity agreements with their partners in Egypt to reduce barriers of entry for the new competitors. ECA’s agreement with Uber and Careem will also allow any new competitor to access Uber’s mapping and trip data, ECA’s statement noted. The two parties will also allow the users (with their consent) to port their data to another similar app (in case of entry of a new player).
The two companies will also not be able to price its bus-hailing services below cost or offer them as pure or mix bundles (with the other services that they offer).
The most interesting part of the agreement, however, is ECA, asking Careem to adjust its logo and marketing material to show its relationship with Uber “to reduce consumer confusion”.