Knock it off!
That's the word from the Federal Trade Commission (FTC) to Blue Rhino and AmeriGas Cylinder Exchange.
The two leading suppliers of propane exchange tanks were accused of illegally colluding to push Walmart -- a key customer -- to accept a reduction in the amount of propane in exchange tanks.
According to the FTC’s administrative complaint, Blue Rhino and AmeriGas controlled approximately 80% of the market for wholesale propane exchange tanks in the U.S. In 2008, the two companies 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 complaint says. 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.
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.