Dreams, Enjoy, and Marina del Sol: FNE Accuses Casinos of Collusion and Requests Multi-Million Dollar Fines
- MV
- 2 oct 2024
- 4 Min. de lectura
The entity accuses the casino chains of agreeing to participate in bidding processes without competition.
Santiago, Chile. October 3, 2024
By Ignacio Andrés Guerra / www.emol.com
The National Economic Prosecutor's Office (FNE) filed a complaint with the Tribunal for the Defense of Free Competition (TDLC) against the casino chains Dreams, Enjoy, and Marina del Sol, accusing them of colluding to manipulate the outcomes of bidding processes for permits granted to the industry. The regulatory agency reported that the events took place between 2020 and 2021, during which time the casinos allegedly agreed that “each one would bid for the renewal of the permits that were under their ownership at that time, without facing competition from the other parties involved in the illicit activity.”
“This collusion allowed the accused companies to secure the renewal of the operating permits for their respective gaming casinos for a period of fifteen years and submit economic bids lower than what they would have in a competitive scenario,” the FNE emphasized. According to the Economic Prosecutor’s Office, those involved included Jaime Wilhelm, CEO of Dreams; Henry Comber, Chairman of the Board of Enjoy; and Nicolás Imschenetzky, Chairman of the Board of Marina del Sol, “who regularly met and maintained contact to discuss various matters, reaching the agreement described in this complaint.”
“In addition, Claudio Fischer, in his role as Chairman of the Board of Dreams, not only approved the company’s anti-competitive behavior but also participated in one of the key meetings related to this infraction. Claudio Tessada, CFO of Dreams, also executed actions that facilitated the implementation of the agreement,” added the FNE.
The highest fines were requested for Dreams, amounting to 126,806 UTA (approximately $112.4 million USD), and for Enjoy, with 41,498 UTA (around $36.8 million USD). These are historic figures for collusion cases in Chile. Regarding the executives involved, the FNE requested a fine of 1,218 UTA (about $1 million USD) for Dreams' CEO Jaime Wilhelm; 941 UTA for Dreams' Chairman Claudio Fischer (about $834,000 USD); 761 UTA (approximately $674,000 USD) for Dreams' CFO Claudio Tessada; and 130 UTA (around $115,000 USD) for Enjoy’s Chairman, Henry Comber.
Regarding Marina del Sol and its involved executives, the FNE asked the TDLC to exempt them from fines, as they had met the legal requirements to qualify for the leniency program. In line with this, the FNE also requested the Tribunal to declare criminal liability exemptions for the Marina del Sol executives covered by the program.
Key Aspects of the Collusion
In its accusation, the FNE asserts that the companies agreed that each would bid for the renewal of the permits they already held, without facing competition, and thus submitted economic offers lower than what would have been made in a free market scenario.
According to the investigation, which was initiated following a complaint by the Superintendency of Casinos (SCJ) in early February 2022, the agreement was carried out through regular meetings and contacts between Wilhelm, Comber, and Imschenetzky from May 2021 to August 2022. Fischer also participated, not only by approving the anti-competitive actions of Dreams but also by attending one of the key meetings. Tessada, on his part, facilitated the anti-competitive coordination.
Evidence shows that as the bidding deadlines approached for the tenders held by the SCJ, there were constant communications between these executives, which became increasingly explicit about the idea of addressing these processes jointly.
Among the actions taken by the FNE to prove the existence of the cartel were searches, records, and seizures carried out on August 2, 2022, along with personnel from the O.S.9 group of the Chilean police at the homes of Wilhelm, Comber, and Imschenetzky. That same day, Marina del Sol applied for leniency in the leniency program.
According to FNE calculations, the bids made by Dreams, Enjoy, and Marina del Sol under this agreement represented an extremely low percentage of the gross revenues these companies earned from gaming. For example, in the case of the San Francisco de Mostazal, Rinconada de los Andes, and Talcahuano casinos (the main casinos of the involved companies), their economic offers were less than 1% of their average gross gaming revenues for 2018-2019. This contrasts with the previous bidding process called by the SCJ in 2018, where other venues were auctioned, and the offers averaged percentages far higher than 20% of the companies' average annual gross gaming revenues.
Historic Sanctions
The fines requested by the FNE are the highest ever sought in a collusion case, significantly surpassing those requested in the “Pollos” (110,000 UTA) and “Navieras,” “Supermarkets,” and “Salmon Feed” cases (90,000 UTA in each).
“The fines take into account the seriousness of a cartel that has directly impacted the interests of the state and the resources of the municipalities where the casinos are located. We hope that, in addition to paying the fines we are requesting, the judgment orders the accused companies to return the permits they obtained as soon as possible and restore competition in this industry,” said the Prosecutor’s Office.
In its complaint, the FNE explained that the magnitude of the fine requested from the TDLC was due to the seriousness of the conduct, the impact on public tenders, the market power of the accused companies, the involvement of high-level executives, their awareness of the illegality of their actions (they used code names, held clandestine meetings, deleted evidence from mobile phones, and used temporary messaging), and the extent or duration of the damage caused.
Between 2017 and 2023, Dreams, Enjoy, and Marina del Sol concentrated 90% of the revenues in the casino industry in Chile (which averaged $400 billion gross annually), and together they hold 70% of the permits to operate these establishments in the country (Chile).
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Note: Mr. Henry Comber Sigall, Chairman of Enjoy, is also Chairman of EuroAmerica Seguros de Vida S.A. (#CasoCurauma / #CuraumaCase).