The competition watchdog has dropped its investigation into allegations of cartel behaviour between James Packer's Crown Resorts and rival Echo Entertainment, saying there is insufficient evidence to support charges following a thorough investigation.
The Australian Competition and Consumer Commission launched the investigation in July this year after Echo chairman John O'Neill sensationally claimed that Mr Packer had promised to keep his casino empire out of Brisbane if Echo promised not to hinder his proposed casino hotel at Sydney Harbour development, Barangaroo.
"The ACCC conducted a thorough investigation of the issues and concluded that there is insufficient evidence to suggest that there has been a contravention of the competition laws. On that basis, the ACCC does not intend to take any further action on the matter," it said in a statement on Tuesday.
Crown, which had denied the allegations, said: "We welcome the announcement from the ACCC today," and would not comment further.
Central to the investigation is an alleged statement from Mr Packer that his casino operator, Crown, would stay out of Queensland if Echo "behaved" itself "vis-a-vis Sydney".
The statement was allegedly made during a luncheon on his boat in March this year attended by Crown executive, and former Labor minister, Mark Arbib, Echo chairman Mr O'Neill and its chief executive John Redmond.
Crown was one of Echo's largest shareholders when the meeting took place, and was proposing to build a luxury hotel casino at Barangaroo. The plan was the VIP gaming operation would either use Echo's casino licence, or Crown would gain a casino licence in its own right.
Mr O'Neill made the allegations in July this year, soon after the NSW government announced plans to advance Mr Packer's proposal over a rival offer from Echo. The allegations by Mr O'Neill triggered an ACCC investigation on the grounds that the statement may suggest an invitation was being made to collude in the allocation of geographic markets between the two casino operators, the commission said.
Bid rigging, when rivals agree not to genuinely compete for tenders, and market sharing, when rivals agree to divide customers or areas between themselves rather than compete, are banned under competition law. Both actions are considered cartel conduct, and could be subject to criminal penalties, including up to 10 years in jail.
Earlier this month, Crown received final approval of the Barangaroo project which now has a price tag of up to $1.5 billion.
This means Echo will lose its monopoly position in Sydney when the exclusivity of its licence ends in 2019.
The two companies now face a turf war in Brisbane with competing plans to build a new casino resort in the city's central business district where Echo already has a casino that is in need of redevelopment. Echo also owns casinos in Townsville and the Gold Coast.