ⓘ Image Source: Uber Newsroom
▸ The Egyptian Competition Authority (ECA) has approved the acquisition of Careem by Uber across Egypt with certain compliances to be adhered by Uber.
▸ Careem is now a fully-owned subsidiary of Uber across the greater Middle-East region and needs regulatory approval from a few more countries.
▸ The co-founder & CEO of Careem Mudassir Sheikha will continue to lead the Careem business and will report to the board.
Back in June 2019, the UAE Minister of Economy approved the acquisition of Careem by Uber. Now the Egyptian Competition Authority has also approved the Uber-Careem deal – onset of commitments proposed by Uber to suppress harm to other ride-hailing competitors.
The first announcement regarding the approval by Egyptian competition watchdog came on 29th Dec 2019 and the one announcing the closure of the acquisition came on 2nd Jan 2020.
ECA Compliances Uber needs to adhere to
The San Francisco-based ride-hailing giant has agreed to abandon any provisions of partnership with other ride-hailing players to enter the booming market of 100 million people of Egypt.
The compliance has to fulfilled for 5 years from the date of closure of the transaction, or when one or more ride-hailing providers achieve 20% of weekly rides individually or 30% collectively in overlapping areas excluding Cairo and Alexandria, Egypt’s biggest cities.
Uber has to nominate an independent trustee, to be approved by ECA to ensure adherence of commitments made by Uber. The company is required to share random samples of trip data with the trustee on a monthly basis.
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 has to 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.
A spokesperson of Uber said…
“We welcome the decision by the Egyptian Competition Authority (ECA) to approve Uber’s pending acquisition of Careem,”
“Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across Egypt.”
Uber-Careem deal: The current state
Careem Networks FZ-LLC is now a wholly-owned subsidiary of Uber. The co-founder & CEO of Careem Mudassir Sheikha will continue to lead the Careem business under Uber and report to the board consisting of three representatives of Uber and two representatives of Careem. The two will operate as independent brands providing respective regional services.
Currently, uber owns Careem’s mobility, delivery and payments businesses across the greater Middle East region with the major markets including Egypt, Jordan, Saudi Arabia and UAE; while the regulatory approval from other countries such as Qatar, Morocco and Pakistan is still awaited for Careem to operate as a subsidiary of Uber in these countries.
Uber in its statement said…
“I’m looking forward to seeing even more innovation from Careem, as they continue to operate independently under their current leadership. Working in parallel, our two platforms will be able to build upon the unique strengths of each, to the benefit of drivers, riders, and the cities we serve across the greater Middle East.”
– Dara Khosrowshahi, CEO, Uber
“Today marks the beginning of a new chapter for Careem. The journey that we started almost a decade ago to simplify the lives of people in the greater Middle East is far from over. Joining forces with Uber accelerates that journey as we become the region’s everyday super app. We are excited to take Careem to new heights alongside Uber, who appreciates the significant regional opportunity, is supportive of our values and culture, and believes in the purpose that drives us.”
– Mudassir Sheikha, CEO & Co-founder, Careem
Uber-Careem deal: A solid vision
Both companies consider this acquisition as an opportunity to expand the variety and reliability of services offered. This is expected to grow both companies in terms of the number of trips, quality and ultimately better economic opportunities with greater revenue for the companies as well as earning of the drivers.
Post going public, Uber in a statement earlier in 2019 said…
“We have structured the acquisition and proposed integration of Careem with the goal of preserving the strengths of both companies, including opportunities to create operating efficiencies across both platforms. We expect to share consumer demand and driver supply across both platforms, thereby increasing network density and reducing wait times for consumers and drivers in the region, while simultaneously achieving synergies from combining back-end support functions and shared technology infrastructure,”