The Egyptian Competition Authority (ECA) on Monday warned Uber and Careem, the two largest ride hailing companies in Egypt, against proceeding on a reported merger deal without receiving prior permission from the authority, an official statement read.

The ECA said it has reached out to the San Francisco and UAE, respectively, based companies over July media reports that Uber is seeking to acquire Careem in an attempt to overcome a costly competition.

The authority explained its reasoning citing article five in the 2005 law on the protection of competition and the prohibition of monopolistic practices, which stipulates that the provisions of the law shall apply to acts committed abroad, should these acts result in the prevention, restriction, or harm of the freedom of competition.

They added that, according to article one, economic activities shall be undertaken in a manner that does not prevent, restrict or harm the freedom of competition in accordance with the provisions of the law.

The ECA said that it has sent an official notification to both firms stating that the acquisition of shares or transfer of ownership or an agreement between competing enterprises constitute a violation of the provisions of the sixth article of the law.

The authority also pointed out the they have the power to stop such deals, citing a recent move by the Singapore Competition Authority which stopped a merger between Uber and their competitor Grab in the south east Asian city-state, to prevent monopolization.

Uber and Careem had been at risk of shutting down their operations in Egypt due to legal status uncertainties prior to the passage of a law regulating their services earlier this year.

Last July, sources told Bloomberg news agency that Uber and Careem were in preliminary talks to combine their Middle Eastern operations.

According to media reports, the companies have discussed a number of potential deal structures, but they have not come to an agreement on the specifics.

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