Carnival's proposed £5.4bn hostile bid for P&O Princess has suffered a major blow after the European Commission opened a four-month investigation into the deal, reports The Daily Telegraph.

The inquiry was announced after the commission decided to reject a request by the Department of Trade & Industry to refer part of the bid to UK competition authorities.

Carnival launched its bid last December in response to Royal Caribbean Cruises' rival merger proposal, which is already under antitrust investigation in the UK and values P&O at £3.7bn.

A four-month delay to Carnival's bid is likely to be welcomed by Royal Caribbean, which expects a UK decision in June. It wants to convince P&O shareholders to accept the lower offer, reasoning that it stands a better chance of gaining regulatory clearance.

P&O's merger with Royal Caribbean sparked the bid battle when it was announced in November.