Wednesday,21 November, 2018
Current issue | Issue 1416, (1 - 7 November 2018)
Wednesday,21 November, 2018
Issue 1416, (1 - 7 November 2018)

Ahram Weekly

Prior notification for car merger

Ride-hailing services Uber and Careem will not be able to complete their merger in Egypt unless they abide by Competition Authority rules, reports Ahmed Morsy

 

an agreement to merge between Uber and Careem would cause serious damage to competition and consumers
An agreement to merge between Uber and Careem would cause serious damage to competition and consumers

In the light of a reported possible merger between ride-hailing companies Uber and Careem, the Egyptian Competition Authority (ECA) has imposed measures on both companies to regulate competition between them and safeguard the competitive structure of the market.

“Uber and Careem are the only ride-hailing applications available in Egypt. Any anti-competitive interaction or harmonisation of their business strategies including an agreement to merge has the potential to cause serious and irrecoverable damage to Egyptian competition that will affect millions of consumers and drivers,” Amir Nabil, chairman of the ECA, said.

US-based Uber was launched in Egypt, its largest Middle East market, in 2014. It employed 157,000 drivers in 2017, and four million passengers have used the service since its launch. It has a presence in 80 countries.
The UAE-based service Careem, Uber’s main rival in the Egyptian market, launched in Egypt in 2014 and operates in 13 countries in the Middle East and Asia.

According to a statement issued by the ECA last week, an agreement to merge between Uber and Careem would cause serious damage to competition and consumers. The statement said that riders and drivers both benefited substantially from the current competition between Uber and Careem and that “these benefits will be lost” if the two parties ceased to compete.

During a press conference held on Monday, Nabil said the ECA addressed the two companies asking them to disclose the details of the merger or acquisition but they did not respond so far.

He also stressed that there is fear of achieving competition in the ride-hailing market in the case of the merger of Uber and Careem, especially after it was proved that the withdrawal of OUSTA, a local ride-hailing company, from the market was to the detriment of competition in the local ride-hailing market.

“The agency is not against attempts at meaningful integration between Uber and Careem, but as a regulatory body we have to make sure that this merger is meaningful and in favour of the public interest,” said Nabil.

In an attempt to preserve the present competitive structure, the ECA has imposed interim measures on the companies before approving any deal. The measures, under Article 20 and sub-Article 2 of the Egyptian Competition Law (ECL), require the two firms to notify the ECA before concluding a merger or any other agreement engendering the same effects.

After notifying the ECA, the authority will have 60 working days to investigate the competitive impact of any agreement in more detail, and the two firms will not be able to consummate the merger unless granted ECA approval.

Both firms are obliged to cooperate with the ECA during the 60-day period and provide it with the data it requests in order to perform its supervisory role. Any infringement of the ECL could lead to the imposition of up to LE500 million in fines “on each relevant person involved in the deal”, the statement said.

The measures have been approved by the ECA’s board of directors, following an initial investigation. “The interim measures aim to safeguard the advantages of the competitive structure in such an important market and prevent any competition distortion that may inflict serious damage to consumers,” Nabil said.

When reports of Uber and Careem planning to merge their activities in the Middle East first surfaced a few months ago, the ECA also issued a statement warning the two firms against the merger.

The present developments come as the two companies are adjusting their working practices to abide by a law passed last May to regulate ride-hailing companies in Egypt, giving the companies six months to adjust their status.

Companies that do not adjust within the six-month period can face fines of up to LE5 million. Drivers working without the required permits can also be fined between LE5,000 and LE20,000.

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