Royal Caribbean Disappointed Over EU’s Merger Decision

Wednesday, July 24, 2002
Royal Caribbean Cruises Ltd. expressed disappointment over the clearance by the EU Commission of Carnival Corporation's hostile bid for P & O Princess Cruises. Chairman and chief executive Richard Fain said he was also surprised at the outcome, which accorded neither with Royal Caribbean's own analysis of the cruise industry in Europe nor with earlier reports of the EU inquiry's own findings. With almost four weeks remaining in the legally scheduled timetable for the enquiry, it is Royal Caribbean's belief that further consultations with third parties would have been appropriate, especially in view of a sudden change in the apparent findings of the Competition Commission as reported in recent days. Royal Caribbean has been allowed no opportunity to comment on this change of direction, signalled at the start of last week. The abrupt change effectively reversed an earlier conviction among Commission officials and many others involved in the process, based on many months of analysis, that Carnival's bid should be prohibited or cleared only subject to major disposals. At a meeting on July 15th between senior representatives of the company and the Competition Commission, no mention whatever was made of the Commission's altered views on the key issues under investigation. Nonetheless, the intention to issue a clearance decision was apparently communicated to the media even while the meeting was still in progress. Richard Fain said: "The Commission has opted for a peremptory merger clearance. Earlier analyses and widely-mooted decisions were abruptly reversed behind closed doors. The concerns of Royal Caribbean and many other third parties over the Carnival bid have been set aside. No explanations have been given, nor reactions sought, in ways that might have allowed a timely consideration of these parties' views -- not least via an Oral Hearing. Such procedural short-cuts have sadly diminished the openness and transparency that all parties rely upon in circumstances such as these." Meanwhile Royal Caribbean remains committed to its agreed merger with P & O Princess Cruises, which has been approved by the competition authorities in Germany and the UK. Both the agreed merger and Carnival's hostile bid are still conditional upon regulatory approval by the Federal Trade Commission in the U.S. "We are doing everything we can to assist the FTC and to help it distinguish clearly between the likely contrasting consequences of the two rival transactions," said Fain.
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