Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC files complaint against two propane exchange tank suppliers for restraining competition, (Mar 28, 2014)
Organizations Mentioned:AmeriGas Partners, L.P. | AmeriGas Partners, LP | Amerigas Propane, Inc. | Bureau of Competition | Ferrellgas Partners, L.P. | Ferrellgas Partners, LP | Ferrellgas, LP | UGI Corp. PA | UGI Corporation | Walmart
By Linda O’Brien, J.D., LL.M.
The FTC announced yesterday that it has issued an administrative complaint against Ferrellgas Partners, L.P and Ferrellgas, L.P. (doing business as Blue Rhino) and UGI Corporation and AmeriGas Partners, L.P. (doing business as AmeriGas Cylinder Exchange), alleging that they illegally coordinated to reduce the amount of propane in their tanks sold to a key customer.
The complaint alleges that Blue Rhino and AmeriGas together controlled approximately 80 percent of the market for wholesale propane exchange tanks in the United States. In 2008, Blue Rhino and AmeriGas each decided to implement a price increase by reducing the amount of propane in their exchange tanks from 17 pounds to 15 pounds, without a corresponding reduction in the wholesale price.
Walmart, which purchased tanks from both Blue Rhino and AmeriGas, refused to accept the fill reduction. Due to the resistance from Walmart, Blue Rhino and AmeriGas colluded by secretly agreeing that neither would deviate from their proposal to reduce the fill level to Walmart. For a period of several months, sales executives from the two propane companies communicated repeatedly by telephone and email to apprise each other of the status of their discussions with Walmart and to work together to take the steps necessary to push Walmart to promptly accept the fill reduction. The secret agreement between Blue Rhino and AmeriGas had the effect of raising the price per pound of propane to Walmart, and likely to the ultimate consumers.
Ferrellgas Partners, L.P., is a limited partnership based in Overland Park, Kansas, that conducts its business activities mostly through Ferrellgas, L.P. Ferrellgas, L.P operates a national propane distribution business, and owns or has access to distribution locations across the United States. Its businesses include filling, refilling, refurbishing, selling, and distributing propane exchange tanks.
UGI Corporation, which is headquartered in King of Prussia, Pennsylvania, is the parent and sole owner of AmeriGas Propane, Inc., which is the general partner of AmeriGas Partners, L.P.
AmeriGas Partners, L.P. is a limited partnership also based in King of Prussia, Pennsylvania. It operates a nationwide propane business through its subsidiary AmeriGas Propane, L.P., which markets and sells propane and propane-related services, including distributing and supplying bulk propane to residential, commercial, and agricultural customers, as well as filling, distributing, marketing, and selling propane exchange tanks.
“This type of collusion may not be direct or visible to consumers, but can lead to higher prices or lower quality,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition. “So companies should be on notice that when we see this type of conduct, we will take action to stop it.”
The Commission vote approving the administrative complaint was 3-1, with Commissioner Maureen Ohlhausen voting no.
Companies: Ferrellgas Partners, L.P.; UGI Corporation; AmeriGas Partners, L.P.
News: Antitrust FederalTradeCommissionNews