The "Mechanism" and Casino Executives Caught in Collusion
- MV
- 3 oct 2024
- 4 Min. de lectura
Chile. October 4th, 2024 / www.desenfoque..cl
Jaime Wilhelm, Claudio Tessada, Claudio Fischer, Henry Comber, and Nicolás Imschenetzky are the five executives from three casino companies accused of collusion involving 152 million dollars. They have been reported to the Free Competition Tribunal by the (Chilean) National Economic Prosecutor’s Office (FNE).
Chile’s 25 casinos are controlled by seven economic groups. Enjoy holds 8 operating licenses, followed by Dreams with 7 licenses, and Marina del Sol with 4. The remaining licenses are split between the groups Luckia and Meier, which hold 2 each, and the groups BoldtInvergaming and Cardoen, with 1 license each.
According to records from the Superintendence of Casinos and Gambling (SCJ), the industry — including municipal casinos — averaged gross gaming revenue exceeding $444 million USD annually from 2017 to 2023. Of this, the companies involved in the collusion held about 90% of the market during this period. This time frame includes 2020-2021, when operations were disrupted by the Covid-19 pandemic, meaning revenues from a typical year of operation were significantly higher than the calculated average for this period.
The facts detailed in the FNE’s complaint constitute a violation of free competition as defined in Article 3, paragraphs one and two, letter (a) of DL 211. This provision sanctions the execution or celebration of any act, event, or agreement that impedes, restricts, or hinders free competition, or is likely to produce such effects. Specifically, it considers the following as violations:
“Agreements or concerted practices between competitors to fix sales or purchase prices, limit production, divide zones or market shares, or affect the outcome of bidding processes (...)”.
According to the Tribunal’s jurisprudence, the elements required to sanction a collusion agreement under the current text of DL 211 are: “(i) the existence of an agreement; (ii) that this agreement involves competitors; and (iii) that it concerns a relevant competition variable,” the complaint explains. The described conduct, it argues, meets these criteria and should be considered a single, continuous collusion agreement.
Two bidding processes—2020 Bidding and 2021 Bidding—sought to award 14 operating licenses. The agreement was carried out by a core group consisting of Dreams, Enjoy, and Marina del Sol, through their respective executives: Jaime Wilhelm (Dreams), Claudio Tessada (Dreams), Claudio Fischer (Dreams), Henry Comber (Enjoy), and Nicolás Imschenetzky (Marina del Sol). Their sole objective was to ensure that each company renewed the licenses for the casinos they already operated. Additionally, these companies were fully aware of the expiration of all the licenses requiring renewal during the period when the collusion agreement was in place.
FNE’s Requested Penalties
The FNE requested that the Tribunal revoke the licenses of Dreams, Enjoy, and Marina del Sol to operate their casinos.
As for the extent or duration of the damage caused by these companies, the conduct affected the results of the bidding processes that granted most of the casino operating licenses in Chile, which last for 15 years. This led to greater profits for the companies due to lower bids in each case and also impacted the public funds of the municipalities where these casinos are located. This harm could persist throughout the remaining years of the licenses.
To calculate the fines, the FNE considered a five-year economic benefit based on the average annual value — in present value — expressed in USD:
Dreams
Monticello
Temuco
Valdivia
Punta Arenas
TOTAL: $111,518,019 USD
Enjoy
Antofagasta
Los Ángeles
Rinconada
TOTAL: $36,494,919 USD
(Source: FNE analysis based on the investigation data)
For the individuals responsible, the FNE requested the Tribunal impose fines on Jaime Wilhelm of $1,071,156 USD, on Claudio Tessada of $669,252 USD, on Claudio Fischer of $827,551 USD, and on Henry Comber of $114,327 USD. Nicolás Imschenetzky avoided a fine by taking advantage of leniency through the whistleblower compensation program, along with Marina del Sol.
The "Mechanism"
This collusion allowed the involved companies to renew their casino operating licenses for a period of 15 years, while submitting lower financial bids than they would have in a competitive scenario.
The conduct involved Jaime Wilhelm, General Manager of Dreams; Henry Comber, Chairman of Enjoy; and Nicolás Imschenetzky, Chairman of Marina del Sol. These individuals met and communicated regularly to discuss various matters and ultimately formed the described collusion agreement.
Claudio Fischer, in his role as Chairman of Dreams, approved the anti-competitive conduct of the company and participated in one of the key meetings during this infraction. Claudio Tessada, CFO of Dreams, carried out actions that facilitated the implementation of the agreement.
On February 3, 2022, the SCJ filed a complaint with the FNE, presenting a series of allegations regarding the lack of competition between Dreams, Enjoy, and Marina del Sol during the bidding processes for casino operating licenses in 2020 and 2021. Among other points, the SCJ noted in its complaint that although 29 potential applicants were identified for the 12 available licenses, only 14 bids were received. Upon analyzing the applications, the SCJ found no competition “among any of the casinos operated by the three main casino chains in Chile, Dreams, Enjoy, and Marina del Sol.” It also highlighted that “out of the 17 new companies established by these three groups, only Marina del Sol applied for licenses to challenge casinos operated by Luckia in Copiapó and the Meier Corporation in Talca.”
Two months later, on April 18, 2022, the FNE issued a resolution to initiate a confidential investigation (Case No. 2693-2022 FNE), aimed at “determining potential violations of Article 3, paragraphs one and two, letter 1, of DL 211.”
On February 3, 2022, the same day that these investigative measures were carried out, the Prosecutor's Office received an indicator application for the leniency program from Marina del Sol. Then, on December 23, 2022, the company formally submitted a request for benefits in accordance with the FNE’s “Internal Guide on Leniency in Collusion Cases,” as outlined in Article 39 bis of DL 211, which included other group companies, Nicolás Imschenetzky, and executives of Marina del Sol (hereinafter, "Request for Benefits").
Once the respective administrative process was completed, the Prosecutor's Office, through the compliance notice contained in Exempt Resolution No. 128 of March 16, 2023, resolved to grant the provisional benefit, the document concludes.
Source: