Commission Justifies U-Turn on Carnival Bid

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Byline: Michael Hoare

The European Competition Commission has cleared US cruise operator Carnival's pound sterling3.8bn ([euro]6bn) bid for UK rival P&O Princess and explained its U-turn on the bid, which it was originally expected to block.The Commission had at first felt the bid, which would give Carnival a dominant position in the UK and Germany, was uncompetitive. But it decided after "in-depth analysis" that low barriers to entry and possible competition from operators outside these countries outweighed the concerns, according to a statement from the Commission on Wednesday.

There had been some suspicion that the Commission changed its mind because an unfavourable ruling in the European Court of First Instance last month made it more inclined to clear mergers.

But the Commission's statement said the economic arguments for blocking the merger were not strong enough. It said: "Although by acquiring P&O Princess, the UK's largest player, Carnival would have around a third of the UK cruise market in terms of passengers, barriers to entry are not significant." It said the market share of the combined company would also be challenged by fast growing domestic players and competitors from other countries. …