Carnival says rival 'torpedoing' deal

The US cruise ship giant Carnival Corporation yesterday accused Royal Caribbean of "trying to torpedo" a proposed £5bn merger with the UK's P&O Princess Cruises by misleading monopoly regulators.

Carnival, which is fighting to get a hostile takeover offer for Princess approved by competition authorities in the US, said Royal was trying to "sabotage" both deals by arguing that a green light for either of them would hurt competition.

In an open letter to Peter Ratcliffe, P&O Princess's chief executive, Carnival called for him to take legal action against Royal for undermining the merger's chances. "We are at a loss to understand why P&O Princess would stand idly by and allow Royal Caribbean to seek to sabotage the regulatory process for both transactions, and any future cruise transactions involving the US or theEuropean Commission," Micky Arison, Carnival's chairman, wrote. However, Royal's chief executive, Richard Fain, rejected Carnival's allegations, insisting it was still "firmly committed" to its merger with P&O. Referring to Carnival's argument that regulators should define the cruise market as part of the overall holiday market, a position P&O supports, Mr Fain said: "By Carnival's logic, there could be a single cruise line in the world without causing harm to the consumer. We respectfully decline to accept that 'logic'."

While Mr Ratcliffe declined to comment on Carnival's accusations, he again rejected a request from Mr Arison for a meeting. "Under the terms of our agreement with Royal, we are not in a position to meet with you," Mr Ratcliffe said.

The letter from Carnival followed the Commission's surprise decision to clear its hostile bid for P&O Princess.