Regulators approved the $3.1 billion deal after Uber guaranteed it would abide by a series of commitments designed to sustain competition in the regional market, Reuters reported Sunday (Dec. 29).
The acquisition plan was revealed last March after nine months of protracted discussion between Careem and Uber.
The deal is anticipated to begin in January pending regulatory approval throughout regional territories where Egypt, currently the largest market for ride-hailing services, is most notable.
Careem will be a wholly-owned subsidiary of Uber yet operate independently with regards to branding and management.
“We welcome the decision by the Egyptian Competition Authority (ECA) to approve Uber’s pending acquisition of Careem,” an Uber spokesperson said, according to published reports. “Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across Egypt.”
Uber will relinquish exclusivity provisions with its intermediaries and partners, reducing entrance impediments into the competitive market. The company will nominate an independent monitoring trustee to be approved by the ECA in order to guarantee fidelity to the deal’s commitments.
Uber will provide random ride data to the trustee on a monthly basis to ensure compliance.
From the deal’s transaction date, the terms and conditions must be followed for five years or until additional ride-hailing competitors achieve 20% of weekly rides individually or 30 percent collectively in overlapping territories other than critical markets Cairo and Alexandria, Egypt’s largest urban areas.
Uber will cap annual increases beyond inflationary costs at 10 percent for Uber X and Careem GO. Surge pricing will also be capped at two-and-a-half times. Surge prices will be applied to a maximum of 30 percent of yearly rides on the respective company platforms.