The most talked merger of the last year, i.e., Uber and Careem is finally approved by Competition Commission of Pakistan. However, CCP has imposed some tough conditions ensuring a pro-competitive field for new entrants to the field of ride-sharing market. CCP has some recommendations with Uber-Careem Merger.
The conditions applied by the Uber will remain applicable for the time period of three years after the merger or till the occurrence of meaningful market entry of competitors.
Tough Conditions for Uber-Careem Merger
As per CCP instructions, the meaningful entry will arise when some other ride haling service will launch in Pakistan and individually achieve 25% market share or collectively 33.3 percent weekly ride-sharing trips on average for the three months consecutively.
If this condition is met, it will allow competitors to grow in this ride-sharing market and Uber, and Careem merger should not abuse the dominant position of the company. The phase 2 review of the merger was carried on as this merger resulted in the consequential merger of lessening of competition in the ride-sharing apps market.
In phase 2, CCEP obliged some conditions on Uber to clear the concerns regarding the increase in prices of products or services, discriminatory pricing, degradation in the quality of services, and possible lack of innovation. It also imposed “no contractual exclusivity” policy so that drivers can join any hailing ride service they want.
Uber- Careem Merger- Here’s What you Need to Know About it
CCP ordered that the peak factor applied to the regular prices should not be more than 2.5 times of the non-surge price.
While hearing these conditions, Uber states:
We welcome the decision by the Competition Commission of Pakistan (CCP) to approve Uber’s pending acquisition of Careem. Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across the country, and in this fast-moving part of the world”
Careem also welcome CCP’s demands. A spokes person from Careem said:
We are pleased with CCP’s approval for Careem’s pending acquisition by Uber and believe that appropriate safeguards have been included in order to ensure healthy competition within the market. We are impressed by the thorough vetting process undertaken by the CCP and will continue to work with the regulators to ensure a transparent and competitive environment that will benefit our captains, customers and the ride hailing industry at large
However Uber will engage third party monitoring trustee to ensure compliance with these conditions.
Also Read: Uber Completes Acquisition of Careem