Uber Urges COFECE to Approve Cornershop AcquisitionBy MBN Staff | Tue, 11/03/2020 - 08:00
Time goes by and Cornershop is still in limbo. Over a year after Uber announced the acquisition of the online grocery shopping app, Mexican authorities have not approved the transaction. This seems to have already made the ride-hailing company desperate and today it urged the Federal Commission of Economic Competition (COFECE) to move along with the process, arguing that this has a negative impact on the entrepreneurial ecosystem and even threatens Cornershop’s survival.
“The long uncertainty that accompanies these extended resolution times substantially impacts the entrepreneurial ecosystem, starting with the Cornershop startup itself, a company that after five years of operation finds itself without funding, without the ability to reach more consumers and facing a latent threat of disappearing in Mexico. The delay could not only put in danger startups looking for an opportunity in the country but also sends a negative signal to foreign investment by undermining business confidence and the execution of investment plans,” Uber said in a statement.
This transaction has already been approved in other markets including Chile, the US and Canada. In Mexico, the wait has been long but a resolution is expected by the end of 2020. COFECE must also assess the risks that this acquisition implies for competition in the country. According to analysts, the chances that the agency will reject the agreement are minimal because, unlike Walmart, Uber does not yet have a share in the retail market.
“We are awaiting antitrust approval for the Cornershop deal. After its approval, we will sign and close on the transaction. Until then, we will continue operating it as an independent business. We receive feedback from retailers and continue to explore other opportunities when they become available,” said Jose Garcia-Pimentel, Director and General Manager of Uber Eats México, in an interview with Mexico Business News back in April.
Since the outbreak of the pandemic, e-commerce has experienced a boom, which in turn has paved the way for new competitors in the online grocery market such as Jüsto, a Mexican online supermarket that raised US$12 million in a new investment round in July.
A favorable resolution from COFECE, according to Uber, may contribute to greater investment from the company. "This, in turn, will help to attract foreign capital, starting with Uber's strong investments in Mexico, which will boost our economy. Likewise, Uber and Cornershop’s merger will allow the expansion of the food purchase and delivery company and the generation of thousands of flexible self-employment opportunities", the company stated.