P&O could face fine of $150m in Florida
Cruise division dismisses accusations of overcharging passengers for four years
Friday 28 March 1997
Nigel Utley of Greig Middleton calculated that, assuming P&O had carried 2.5 million passengers in the Caribbean over each of the past four years, the company could face a fine of up to $150m.
Florida's attorney general said this week that Princess had deceived customers by adding an unnecessary "port charge" to fares. The accusation was made in a civil complaint that seeks penalties of as much as $15,000 for each violation of Florida's Deceptive and Unfair Trade Practices Act.
The state of Florida said it had not decided whether to levy the fine based on the number of advertisements it determined were deceptive or on how many consumers it thinks were deceived. The complaint came after six other cruise lines, including Carnival, the market leader, agreed last month to pay $295,500 and change their advertising to settle the allegations.
Peter Smith, a P&O spokesman, said the company had been targeted because it did not agree to be part of the industry-wide suit. It maintained that its advertising met state standards and said it had remitted to the state any money it collected as part of specified additional charges.
The attorney general questioned a P&O practice of advertising a cruise at $499, for example, and writing in smaller print that it would also charge port taxes, harbour dues and government fees of $100.
News of the alleged overcharging comes only days after P&O announced full-year figures for 1996, in which the cruise division was the star performer. Profits from the operation rose 47 per cent to pounds 157.5m.
The strong performance of cruises more than offset plunging profits from P&O's ferries and container shipping operations and Lord Sterling, its chairman, used the results announcement to detail a 50 per cent expansion of the cruise division's capacity.
Analysts were divided on the likely impact of the charges. Both ABN Amro and SBC Warburg, however, moved the shares on to sell recommendations.
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