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FTC and Propane Distributors Agree on Proposed Deal to End Price-Fixing Investigation

The Federal Trade Commission has reached a proposed consent agreement with two major propane distributors, Ferrellgas, L.P. (d/b/a Blue Rhino) and AmeriGas Partners, L.P., that would settle an FTC price-fixing investigation into the two companies.  The proposed deal was announced by the FTC in an order withdrawing the matter from adjudication so that the proposed agreement could be reviewed.

The alleged victim of the alleged price-fixing scheme (besides propane consumers) was the retail giant Walmart.  According to a complaint filed by the FTC last March, Blue Rhino and AmeriGas, who jointly control about 80 percent of the U.S. wholesale propane exchange tank market, colluded in 2008 to increase prices by reducing the quantity of propane gas in the steel tanks the companies sold to Walmart – from 17 pounds to 15 pounds – without reducing prices accordingly.

The FTC complaint alleges that Blue Rhino conceived the scheme and that the two companies colluded through phone calls, including a series of calls between Blue Rhino’s president and AmeriGas’s director of national accounts.  According to the FTC, Blue Rhino and AmeriGas told Walmart the new 15-pound quantity was a new “industry standard,” and the two propane providers communicated by phone throughout the summer and fall of 2008 to ensure that each company held firm in resisting Walmart’s demands for lower prices, eventually persuading Walmart to purchase 15-pound tanks from both companies.

The details of the proposed consent agreement between the FTC and the two distributors have not been made public.