The Egyptian Competition Authority are working on a full-fledged report on the potential impact of huge merger deal between Uber and Careem in the Middle East on the passenger market in Egypt, and is requesting data from the two companies regarding the deal.
According to Bloomberg, Uber seeks to either acquire more than half of Careem after merging or fully purchase it in order to overcome the costly competition between the two companies.
High-level government sources told Al-Masry Al-Youm on Monday that the Competition Protection Authority requested both companies provide all data and documents related to the ongoing negotiations on the merger to study its effects on the Egyptian market and the freedom of competition in the passenger transport sector.
It has not received a response from either companies, the sources said.
The sources added that the two companies have a deadline until Tuesday in accordance to the law to respond to the authority’s request, after which it has the right to take legal action against them.
The authority will refer the file to the public prosecutor because of the vagueness surrounding the potential merger deal.
The acquisition of one of the two companies on the other will create a monopoly position in the market, which would limit the freedom of competition in this vital sector and will affect consumers by limiting promotions and lead price increases, the sources said.
The merger would also have a negative effect on drivers, as the acquisition would reduce their number and restrict their working conditions, subjecting them to the absolute control of a monopoly entity that could lead to social problems which would in turn affect the Egyptian economy, the sources added.
The sector has been recently beneficial to a large proportion of job seekers, which contributed to the reduction of unemployment rates. This potential acquisition will affect investment opportunities in this sector, as the merged company will have achieved absolute control that would restrict the emergence of a new competitor.
The governmental sources stressed that such mergers are prevented in other countries because of negative effects on workers and consumers.
Singapore recently rejected Uber’s acquisition of a competitive company in order to prevent any adverse effects on competition in its market, according to the sources.
The sources explained that Article 22 of the Competition Protection Act states that anyone who does not provide the agency with the requested data by the deadline specified will be violating the law.
The authority has the right in accordance to Article 22 to file a claim against that party for non-cooperation.
Edited translation from Al-Masry Al-Youm