CAIRO (Reuters) – Egyptian regulators have approved Uber’s (UBER.N) $3.1 billion acquisition of regional rival Careem after agreeing to a set of commitments proposed by the U.S.-based ride-hailing service meant to reduce harm to competitors.
FILE PHOTO: An UBER bus ushers Egypt fans to a soccer stadium before the start of a game against Ghana. REUTERS/Amr Abdallah Dalsh
The Careem acquisition was announced in March after more than nine months of stop-start talks between the two companies, handing Uber a much-needed victory after a series of overseas divestments.
The deal is expected to close in January, 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 ridehailing services.
Careem will become a wholly owned subsidiary of Uber but will continue to operate as an independent brand with independent management.
“We welcome the decision by the Egyptian Competition Authority (ECA) to approve Uber’s pending acquisition of Careem,” a spokesman for Uber said. “Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across Egypt.”
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 and reduce barriers to entry into the market.
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% of weekly rides individually or 30% collectively in overlapping areas excluding Cairo and Alexandria, Egypt’s biggest cities.
Excluding surge pricing and promotions, Uber will cap its yearly fare increases beyond inflationary costs at 10% for Uber X and Careem GO, the most popular services in Egypt.
Surge pricing, a mechanism that raises prices when demand far exceeds supply, will also be capped on Uber X and Careem GO at 2.5 times. Surge prices will be applied to a maximum of 30% of annual trips on the two services.
Reporting by Yousef Saba; Editing by Nadine Awadalla and David Holmes