Festival Cruises has filed an appeal with the First Instance Tribunal of the Court of Luxembourg against the European Community Commission and particularly against the decision by the Competition and Antitrust Commission, seeking to have Carnival Corporation's acquisition of P&O Princess Cruises (POC) overturned.

According to Festival, the Competition and Antitrust Commission led by Mario Monti should have pointed out that the dual-listed company would be so strong financially and competitively that no viable competition will survive in the same cruise markets.

By approving the merger, Festival said the commission is allowing one company to control 65 to 70 percent of certain European markets, even up to 90 percent in some countries, and did not take other fundamental issues into consideration, such as the impact on suppliers, ports and shipyards.

The merger has of course already been consumated and was previously approved by the European Commission and by the U.S. Federal Trade Commission.

George Poulides, chairman of Festival, told Cruise Industry News (for publication in the 2003 Annual) that the only benefits from this merger are for Carnival and the shareholders of Carnival and POC. Meanwhile, the damage to the rest of the industry may be extraordinary, affecting destinations, suppliers, shipyards, and others, he said.

Poulides said that the creation of such a single group will massively outweigh any of its competitors. In this case, he went on to say, the market imbalance will only be exacerbated by the flexibility of the cruise industry, with its mobile assets to target regional markets with comparatively little shoreside investment. At the same time, the high capital requirements for the industry's assets - a minimum of $250 million for a single mid-sized ship - raises massive barriers against new start-ups and decreases the chances of any smaller businesses emerging to challenge the market leader's supremacy.

The sheer dominance of the combined group within the industry may also discourage future funding for rival cruise lines, Poulides said, noting that Festival, with only seven ships, is now the nearest competitor to the new group, which he said is heading towards having a fleet of 100 ships.

Poulides said that while the majority of the capacity of the expanded Carnival group will be aimed at the North American market, half of the individual brands are targeted wholly or substantially at market segments in Europe. He calculated that the merged fleet will have 40 to 70 percent share of each of Europe's five main passenger markets.

And, he continued, since most analysts regard Europe as the source market that will surge in volume over the next decade, the merged entity will undoubtedly increase its activities on that side of the Atlantic.

The dominance of the Carnival group will allow it to "mop up" in those national markets and operating sectors where there is any remaining competition, Poulides added.

He is also concerned about the impact on the service sector, noting that travel agents, shipping agents and excursion operators are likely to feel the brunt of the increased buying power of such a single dominant group. Poulides went on to say that the scenario for shipyards may be even tougher, with Fincantieri, for instance, being dependent on one customer for 80 to 100 percent of its cruise ship orders.

Also, enjoying unprecedented financing options with stock market listings on both sides of the Atlantic, the power of Carnival is likely to spiral even further in the future, Poulides said.