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April 12, 2002

EC starts "detailed" probe of Carnival's Princess bid
Saying that there are "serious concerns," the European Commission has launched a detailed investigation into the proposed takeover of P&O Princess by Carnival Corporation.

The Commission says there are particularly iconcerns related to the parties' strong position in the cruise sector in the U.K., Germany and possibly other European countries.

The Commission says its preliminary investigations "indicate that the operation raises serious concerns regarding the market for oceanic cruises in the United Kingdom and Germany where the operation is likely to lead to the creation or strengthening of a dominant position."

The Commission will also investigate the cruise sector in Spain, Italy and France, where the combined entity would have a strong position but with minimal overlaps.

The Commission says some concerns have also been raised as to the detrimental effect that Carnival's bid could eventually have on certain vertically related markets linked to the ocean cruise industry, primarily the shipbuilding business, the ports sector and travel agencies. These concerns will be further assessed in the in-depth investigation.

In view of the serious doubts on the compatibility of the operation with the common market and the functioning of the EEA Agreement, the Commission decided to initiate proceedings in accordance with the Merger Regulation. The Commission has now four months to reach a final decision on the notified transaction. The initiation of the formal investigation procedure is a procedural step and is without prejudice to the final outcome.

UK referral request
The competition authorities of the United Kingdom have requested referral of the case pursuant to Article 9 of the EC Merger Regulation in so far as the merger affects competition in the market for the supply of cruise holidays in the United Kingdom. The Commission considers that the formal conditions for such a referral are met as the proposed operation threatens to create a dominant position on a distinct market within the United Kingdom. It has in such circumstances discretion whether to refer the examination of such a distinct market to the Member State or whether to open proceedings itself. The Commission has carefully weighed the arguments for and against such a referral, and in particular the fact that the rival bid for P&O Princess, launched by Royal Caribbean is currently under investigation in the United Kingdom. However, as the Commission's own preliminary investigation revealed that the operation proposed by Carnival also raised competition concerns in other Member States, the Commission considers that it is under these circumstances more appropriate not to fragment the case and not to conduct parallel investigations in Europe.

Pursuant to the referral provisions of the EC Merger Regulation (Article 9), the Commission had the option in this case to either refer the part of the case to the UK Competition Authorities or to open a detailed investigation itself, including the markets which are the subject of the request.

Pursuant to the bilateral agreement of 1991 on antitrust co-operation between the European Commission and the United States of America, the European Commission and the Federal Trade Commission have been cooperating and will continue to do so. The European Commission has also been in fruitful contact with the United Kingdom's Competition Commission to which the Secretary for Trade and Industry has referred the UK's investigation of Royal Caribbean's bid

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