Cruise deal referred to regulator

The proposed merger between the cruise operators P&O Princess and Royal Caribbean has been referred to the UK's Competition Commission by the government.

Despite the move, the head of P&O Princess said he was confident the deal would be approved.

The two firms announced their intention to create a new power in the cruise line industry last November.

Since then the US firm Carnival has launched a £3.5bn bid for P&O Princess, which the UK cruise operator has rejected.

On the London stock exchange, shares in P&O Princess fell 7p to 392p following the announcement.

New number one

The planned merger between P&O Princess and Royal Caribbean would create the world's biggest cruise ship operator, ousting Carnival from the top spot.

The new business would have a market value of about $6bn (£4.1bn), employing some 40,000 people.

It would offer cruises in the US, Australia, the Mediterranean and the Baltic Sea, with a fleet of over 40 ships.

"The Director General of Fair Trading has advised me that there remain sufficient competition concerns surrounding this merger to warrant a reference to the Competition Commission," the Trade & Industry Secretary Patricia Hewitt said in a statement.

But the head of P&O Princess remained upbeat.

"Notwithstanding this reference, we are confident that we will receive clearance once the Competition Commission has fully reviewed the substantive facts and issues surrounding our combination with Royal Caribbean," said chief executive Peter Ratcliffe.

P&O Princess shareholders are due to vote on the proposed merger with Royal Caribbean at an extraordinary general meeting on 14 February.