Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Propane tank suppliers settle FTC charges of coordinating reduction of gas levels, (Oct 31, 2014)

Blue Rhino and AmeriGas Cylinder Exchange, two leading suppliers of propane exchange tanks, have agreed in proposed settlements to be barred from agreeing with competitors to modify fill levels or otherwise fix the prices of exchange tanks and from coordinating communications to customers, the FTC has announced.

In March 2014, the FTC filed an administrative complaint alleging that Ferrellgas Partners, LP and Ferrellgas, LP (doing business as Blue Rhino) and UGI Corporation and AmeriGas Partners, LP (doing business as AmeriGas Cylinder Exchange), which together controlled approximately 80% of the market for wholesale propane exchange tanks in the United States, had illegally coordinated a reduction in the amount of propane in tanks provided to Walmart, a key customer. It was alleged that 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.

Faced with resistance from Walmart, the two companies colluded by secretly agreeing to coordinate their negotiations with Walmart in order to push it to accept the fill reduction. The agreement between Blue Rhino and AmeriGas to maintain a united front against Walmart had the effect of raising the price per pound of propane sold to Walmart, and likely to the ultimate consumers, according to the FTC.

The consent agreements prohibit the companies from soliciting, offering, participating in, or entering or attempting to enter into any type of agreement with any competitor in the propane exchange business to raise, fix, maintain, or stabilize the prices or price levels of propane exchange tanks through any means—including modifying the fill level contained in propane tanks or coordinating communications to customers. The companies also are prohibited from sharing sensitive non-public business information with competitors, except in narrowly defined circumstances. The consent agreements also require the companies to maintain antitrust compliance programs.

"Simply put, the antitrust laws do not permit private agreements to avoid competition," said Deborah Feinstein, Director of the FTC’s Bureau of Competition. "Agreements between competitors to limit any dimension of competition can harm consumers through higher prices or lower quality."

The Commission vote to accept the proposed consent orders for public comment was 3-1-1, with Commissioner Maureen K. Ohlhausen dissenting and Commissioner Terrell McSweeny not participating. Chairwoman Edith Ramirez and Commissioner Julie Brill issued a joint statement, Commissioner Joshua D. Wright issued a separate statement, and Commissioner Maureen K. Ohlhausen issued a dissenting statement.

The FTC will publish the consent agreements in the Federal Register shortly. The agreements will be subject to public comment for 30 days, beginning today and continuing through December 2, 2014, after which the Commission will decide whether to make the proposed consent orders final. Interested parties can submit written comments electronically or in paper form by following the instructions in the "Accessibility" portion of the Federal Register notice.

Companies: Ferrellgas Partners, LP; Ferrellgas, LP; UGI Corporation; AmeriGas Partners, LP.

News: Antitrust FederalTradeCommissionNews