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News from the world of cruising ~
February 12, 2002

Carnival Corporation:
Antitrust Position

LONDON, Feb 12 - Carnival continues to believe, and has been so advised, that there is no material difference in the regulatory analysis between a Carnival/P&O Princess combination and a Royal Caribbean/P&O Princess combination. Carnival strongly believes that its Increased Offer is as deliverable as the Royal Caribbean Proposal.

In the light of P&O Princess' continued rejection of Carnival's offer on the grounds of antitrust concerns, Carnival has today written to P&O Princess to request a meeting to discuss the antitrust position in detail. A copy of the letter is attached.


Carnival filed for antitrust clearance under the Hart Scott Rodino Act on 21 December 2001. On 22 January 2002, Carnival announced that, as expected, it had received a request for additional information from the Federal Trade Commission (the "FTC") with respect to a Carnival/P&O Princess combination. 

On 24 January 2002, P&O Princess acknowledged that it had received a similar request from the FTC with respect to both Carnival's offer and the Royal Caribbean Proposal. On 25 January 2002, Royal Caribbean announced that it had received a similar request from the FTC in respect of the Royal Caribbean Proposal. There has been no change to Carnival's expectation that the FTC will conclude its antitrust review of both Carnival's offer and the Royal Caribbean Proposal on the same timetable.


Carnival's offer is subject to review by the European Commission. Carnival has had and is continuing its substantive discussions with the European Commission in Brussels. Carnival's filing is in an advanced stage and will be filed with the European Commission before the end of February. Accordingly, Carnival and its advisors continue to expect that the EU antitrust review should be concluded before the FTC decision is known, based on the normal EU timetable.

The decision by the UK Secretary of State for Trade and Industry to refer the Royal Caribbean Proposal to the Competition Commission does not affect the advice that Carnival has received about the prospects for clearance of its offer by the European Commission. Carnival notes that the reference to the Competition Commission refers to issues which are specific to Royal Caribbean and P&O Princess in the UK. The outcome of the UK antitrust process for the Royal Caribbean Proposal will not be known until late May at the earliest. Carnival's commitment to obtaining clearance Carnival wishes to confirm that it has had no discussions with US or EU antitrust regulators relating to the disposal of any of its businesses, whether Carnival Cruise Lines, Costa, Cunard, Holland American Lines, Seabourn, Windstar, Holland American Tours or other. Nevertheless, Carnival confirms it would be prepared to consider making such non-material disposals as the regulators may require in order to obtain regulatory clearance, and will work constructively with the antitrust regulators in the US and Europe to enable it to complete its offer for P&O Princess. The materiality of any such disposals could only be assessed in the context of actual discussions with the appropriate regulatory authority at the relevant time. 

Following is the text of the letter sent today by Carnival to Peter Ratcliffe, Chief Executive Officer of P&O Princess.

12 February 2002

Dear Peter

We are pleased that you have acknowledged that our Increased Offer is at a level which reflects a "realistic" value for P&O Princess. We remain concerned, however, that you have not acknowledged that our offer is as deliverable as the Royal Caribbean Proposal on antitrust grounds.

We understand that you may be restricted from speaking to us under the terms of your contractual arrangements with Royal Caribbean. However, if you are able to meet us without breaching these arrangements, we would like to present to you in detail our analysis on the antitrust position and why we believe that our offer faces no greater risk than that faced by the Royal Caribbean Proposal. We have received detailed advice from our US and European antitrust lawyers, Hogan & Hartson and Herbert Smith, on this matter and are firmly of the view that both proposals face similar antitrust issues and that both investigations will involve the same data and be conducted under the same legal standards and on essentially the same timetable.

We are also concerned that you have questioned our commitment to seeing our offer through the antitrust process and taking whatever steps are reasonably required to consummate our offer. You have stated that through your discussions and negotiations with Royal Caribbean you have satisfied yourself that Royal Caribbean is willing to take such steps, although you have to our knowledge not commented on what those steps could be. We have publicly confirmed our commitment to our offer, including in our announcement of 4 February 2002, where we stated that we were "fully committed ... to pursuing the regulatory reviews in the US and Europe to their ultimate conclusion".

However, the comments that you have made seem to support our view that the level of comfort you are seeking can only be obtained through dialogue and cannot be satisfied through legal language and contractual commitments. We are therefore proposing a meeting to discuss these issues and to demonstrate the commitment we have to seeing through the antitrust process. 

We would like to take this opportunity to reaffirm that Carnival is prepared to discuss a DLC or similar structure but we have been advised that the DLC structure under the Royal Caribbean Proposal could be defective and, unless remedied, could result in a material US federal income tax liability. It is not feasible for us to offer an alternative structure equivalent to the Royal Caribbean Proposal on a unilateral basis, but Carnival is prepared to work in good faith with P&O Princess in order to implement a tax efficient structure. Carnival envisages that the economic interest of P&O Princess under a DLC structure with Carnival would reflect the valuation of P&O Princess as set out in the Increased Offer.

I am currently in London and free to meet with you at any time to discuss the above. I firmly believe that such a meeting will enable you to understand that our offer is as deliverable as the Royal Caribbean Proposal and that such a meeting is in the interest of your shareholders. I look forward to hearing from you shortly,

Yours sincerely

M. Arison
Chairman and CEO

[Terms used in this announcement have the same meaning as in the Announcement dated 7 February 2002.]

SOURCE Carnival Corporation

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