Egypt's Competition Authority (ECA) has raised concerns over Uber's pending acquisition of competing ride hailing platform, Careem. The ECA has stated that documents filed by Uber for the acquisition of Careem's shares can be intepreted as collusion by two competitors in the same industry.
The talks between Uber and Careem started in July 2018 as Careem was looking to raise money and Uber saw it as an opportunity to acquire a majority stake in the company that has given it tough competition in Northe Afrika and the Middle East. At the time the talks started it is reported that part of the deal will see Careem’s management running the new combined business in North Afrika and the Middle East on a day-to-day basis while retaining one or both of the companies’ local brands.
Ride hailing in Egypt
As far as Afrika goes, Egypt is miles ahead as far as how big the ride hailing industry is in the country compared to other Afrikan countries. As an example, in 2017, Uber reached the significant milestone of having 150,000 registered drivers in Egypt.
However, it hasn't always been a smooth ride for the two dominant ride hailing services in Egypt. Despite them racing for market share, they have also faced a push back from Egypt's independent cab drivers.
It all started with Egypt's taxi drivers taking Uber and Careem to court accusing them of being unfair competition. This resulted in Egypt's Admistrative court banning Uber and Careem. The ban was challenged by Uber and consequently reversed but authorities in Egypt have since tabled new regulations to govern ride hailing services operating in the country.
Will the deal happen?
The ECA has further explained that, as part of its statement, Uber and Careem should have first notified them before finalizing their agreements. According to the organzation, the deal, if finalized in its current terms, will have an impact on competition in the ride hailing industry in Egypt and they are in violation of Egyptian law.
It is not clear when the matter will be resolved, whether in favour of the acquisition or against. The ECA has indicated that it has presented its findings to both ride hailing companies.
Cover image credit: Traffic in Cairo. Wikimediz Commons