Competition Commission initiates Phase II review of Uber's acquisition of Careem

The Competition Act 2010 prohibits undertakings from entering into a merger which will substantially reduce competition by creating or strengthening a dominant position in the relevant market.

Further, the Competition Commission requires undertakings to apply for pre-merger clearance of an intended merger where they intend to acquire the shares or assets of another undertaking or where two or more undertakings intend to merge the whole or part of their businesses and the pre-merger thresholds specified by the commission are met.

The Competition Commission recently decided on a joint pre-merger application by Uber Technologies, Inc and Careem Inc, notifying the commission of Uber's acquisition of Careem through Uber's subsidiary Augusta Acquisition BV.

The applicants considered the ridesharing services market to be the relevant product market and Islamabad, Karachi, Lahore, Faisalabad, Gujranwala, Hyderabad, Multan and Peshawar to be the relevant geographic markets. They claimed that ridesharing services are part of the broader local, urban transport market, which covers all means of transporting people (eg, rickshaws, taxis, buses and minibuses). As such, the applicants' claimed that their combined market share in the overall urban transport market would not result in a dominant position.

The Competition Commission disagreed with the applicants' view, observing as follows:

• Ridesharing – by reason of its characteristics, prices and intended usage – is not interchangeable or substitutable with the mode of transport referred to by the applicants. Customers of Uber and Careem rely on mobile apps or the Internet to summon matched drivers to their location, whereas with other modes of transport, customers usually have to hail them or wait at designated locations.
• Uber and Careem provide different packages according to the quality of the transport being hailed (eg, air conditioned, economy and executive), whereas other modes of transport do not provide a choice of services.
• Uber and Careem offer promotions and discounts, while other modes of transport do not.
• Ridesharing services are distinct from all other modes of transport referred to by the applicants; therefore, the relevant product market should be limited to ridesharing services.

The Competition Commission concluded that based on its assessment of the relevant market, the proposed merger was likely to substantially weaken competition through the creation or strengthening of a dominant position in the relevant market. Thus, the commission initiated a Phase II review.

For further information on this topic please contact Sanaya F Vachha at Vellani & Vellani by telephone (+92 21 3580 1000) or email (sanaya.vachha@vellani.com). The Vellani & Vellani website can be accessed at www.vellani.com.