FTC Approves Final Order Barring Blue Rhino, AmeriGas from Restraining Competition

Following a public comment period, the Federal Trade Commission has approved final orders settling charges that Blue Rhino and AmeriGas Cylinder Exchange, the two leading suppliers of propane exchange tanks, illegally colluded to push Walmart, a key customer, to accept a reduction in the amount of propane in exchange tanks.

Under the settlements, each company is 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’s administrative complaint alleges that, together, Blue Rhino and AmeriGas 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. 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.

The Commission vote approving the final order was 3-1-1, with Commissioner Maureen K. Ohlhausen voting no and Commissioner Terrell McSweeny not participating. (FTC File No. 111-0195; the staff contact is Eric Edmondson, FTC Western Region, San Francisco, 415-848-5179.)