Fury as EC clears Princess bid

EUROPEAN Commission watchdogs have cleared the £3.5bn hostile takeover bid for P&O Princess Cruises by Carnival Cruises, leaving incandescent rival suitor Royal Caribbean threatening legal action.

Competition Commissioner Mario Monti's move marked a staggering U-turn from his previous stance on Carnival's bid. Until a fortnight ago, he was still expected to block the deal or impose tough demands on the world's biggest cruise operator.

While Carnival was 'delighted' with the decision, it enraged Royal Caribbean chief Richard Fain, with whom Princess had agreed a merger. His spokesman said: 'We will be looking hard at our legal options on this decision.' Fain could appeal to the European Court of Justice in what would be another tough encounter for Monti. The commissioner is said to have changed his mind after the European Court overturned his 1999 block on the Airtours/First Choice merger.

Both the Carnival and Princess deals are still being reviewed by US officials and decisions are expected in September.

Meanwhile, Princess whetted both suitors' appetites by declaring it could beat City profit forecasts for the year. Pre-tax profits in the three months to 30 June came in at $98.9m (£63m) against $93.8m a year previously on turnover of $638.1m against $647.6m last time.