The two leading suppliers of pre-filled propane exchange tanks, commonly used in barbecue grills and outdoor heaters, have reached an agreement with the U.S. Federal Trade Commission to settle charges that the companies illegally agreed not to deviate from their plan to reduce the volume of propane sold to Walmart and other key customers. The companies had previously settled private multi-district litigation based on the same conduct.
The administrative complaint, issued on March 27, 2014, alleged that Blue Rhino and AmeriGas—which together account for around 80 percent of the market—each decided in 2008 to reduce the fill of their propane tanks from 17 to 15 pounds without a corresponding price decrease, effectively increasing by 13 percent the per-unit price of the propane. This initial reduction was not alleged to be an unlawful agreement. However, in the face of resistance from Walmart, Blue Rhino and AmeriGas allegedly agreed that each company would stand firm in its reduction and not give in to Walmart's pressure. Among the evidence supporting these allegations were telephone and email conversations in which the companies' executives discussed the reduction and urged each other to "hang in there" when insisting on the 15-pound tank. The complaint alleged that the conduct was a per se unlawful price-fixing agreement.
On Oct. 31, 2014, the FTC reached consent agreements with Blue Rhino and AmeriGas. The Commission voted to accept the proposed consent orders 3-1-1, with Commissioner Terrell McSweeny not participating and Commissioner Maureen Ohlhausen dissenting on the ground that there was only "very weak evidence supporting what [was], at best, a novel Section 1 case." The consent agreements prohibit Blue Rhino and AmeriGas from soliciting, offering, participating in, or entering into any type of agreement with any competitor to modify the fill level or maintain, stabilize, or otherwise fix the price of propane exchange tanks. The agreements also prohibit the companies from coordinating communications to customers or competitors, and from sharing competitively sensitive non-public information with competitors. The public comment period for the proposed agreement closed on Dec. 2, 2014.
The FTC's case file is available here.
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