Statement of Chairwoman Edith Ramirez and Commissioner Julie Brill

Federal Trade Commission

In the Matter of Ferrellgas Partners, L.P., et al.

Docket No. 9360

October 31, 2014

The Commission is issuing for public comment two identical proposed Orders that would 

resolve allegations that AmeriGas and Blue Rhino entered into an unlawful agreement that 

neither would deviate from its plan to reduce the amount of propane in prefilled propane 

exchange tanks sold to Walmart. The Commission commenced administrative litigation in this 

matter on March 27, 2014; AmeriGas and Blue Rhino have now agreed to settle the case. The 

proposed Orders will prevent the parties from engaging in collusive conduct with rivals in the 

future. Each respondent is prohibited from agreeing with any competitor in the propane tank 

exchange business to modify fill levels or otherwise to fix the price of exchange tanks, or to 

exchange competitively sensitive information. In addition, each respondent is required to 

maintain an antitrust compliance program. 

Propane exchange tanks are a staple in the backyards of American consumers. The 

collusive agreement, as alleged, was facially anticompetitive and had the effect of raising the 

price per pound of propane exchange tanks to Walmart and likely ultimate consumers in 

violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45. Our action today 

thus provides important relief to American consumers and sends a clear signal to the marketplace 

that anticompetitive collusion will not be tolerated. 

AmeriGas and Blue Rhino are the two largest suppliers of propane exchange tanks in the 

United States, together controlling approximately 80 percent of the market. No other competitor 

serves more than nine percent of the market or is capable of serving large national retailers, such 

as Walmart and Lowe’s. As detailed in the Commission’s Complaint, in 2008, AmeriGas and 

Blue Rhino faced rapidly increasing input costs. To offset these rising costs, AmeriGas and Blue 

Rhino each decided to reduce the fill level in their propane exchange tanks from 17 to 15 pounds 

– without a corresponding price decrease. This effectively increased the per unit price of the 

propane by 13 percent.

Walmart rejected proposals from both AmeriGas and Blue Rhino to reduce the propane 

fill levels; Walmart’s buyer viewed each proposal as a price increase to which Walmart was not 

willing to agree. Although Blue Rhino’s largest customer, Lowe’s, accepted the fill reduction, it 

did so on the express condition that all of Blue Rhino’s customers (including Walmart) also 

accept the fill reduction promptly. Blue Rhino and AmeriGas understood that they could not 

sustain the fill reduction across the industry unless it was accepted by Walmart. 

The Commission’s Complaint does not allege that the Respondents’ initial decisions to 

reduce fill levels to 15 pounds were the result of an agreement. However, the Complaint alleges 

that thereafter, in light of Walmart’s continued resistance to the reduction, and the risk that other 

customers would also demand to return to 17-pound tanks, AmeriGas and Blue Rhino agreed 

that neither would accede to pressure from Walmart. Faced with this united front, Walmart 
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capitulated to the sellers’ demand. This subsequent agreement to act in concert in negotiations 

with Walmart is the basis for the Commission’s challenge. 

The investigation revealed ample evidence to provide us with a reason to believe that 

AmeriGas and Blue Rhino entered into an unlawful agreement.

1 For example, AmeriGas and 

Blue Rhino executives spoke frequently in the days leading up to Walmart’s decision to accept 

the fill reductions, and at one point a frustrated AmeriGas Director of National Accounts 

suggested to Blue Rhino that it was time for them to issue an ultimatum to Walmart.2 Blue 

Rhino’s Vice President of Sales responded by urging AmeriGas to “hang in there” as Blue Rhino 

continued to negotiate with Walmart.3 

Reducing the volume of propane gas in a tank while keeping the price constant is 

equivalent to a per unit price increase. Indeed, that is how Walmart understood the fill reduction.

The joint strategy therefore entails a restriction on price competition and does not present any 

new or novel theory of liability.4 It does not matter that the Complaint does not allege that 

AmeriGas and Blue Rhino agreed to keep their respective prices to Walmart constant, or that 

Walmart may have been free to negotiate prices with the parties, as noted in Commissioner 

Ohlhausen’s dissent. The law is clear that price fixing agreements “may or may not be aimed at 

complete elimination of price competition”5 and are unlawful in either instance because of the 

enormous threat they pose to the free market.

6

 There is also no reasonable procompetitive 

justification for the alleged agreement, particularly since it was directed to a significant customer 

whose refusal to accept the proposal had the potential to cause the firms’ fill reduction plans to 

 1 In the Matter of Ferrellgas Partners, L.P., et al., FTC Docket No. 9360, Complaint (Mar. 27, 2014), available at

www.ftc.gov/system/files/documents/cases/140401amerigascomplaint.pdf.

2 Complaint ¶ 50.

3 Id.

4 Cf. Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 648 (1980) (per curiam) (agreement among horizontal 

competitors to eliminate a form of short-term credit was tantamount to an agreement to eliminate discounts and held 

per se illegal as price fixing even though there was no agreement on actual price); U.S. v. Socony-Vacuum Oil Co., 

310 U.S. 150, 223-24, n.59 (1940) (agreements among horizontal competitors to buy surplus gasoline on spot 

market to prevent prices from falling sharply held per se illegal, even though there was no agreement on price to be 

maintained).

5 Socony-Vacuum Oil, 310 U.S. at 224 n.59. See also F.T.C. v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 

423 (1980) (noting that constriction of supply is the essence of price-fixing, whether it be accomplished by 

agreement upon a price, which will decrease the quantity demanded, or by agreeing upon an output, which will 

increase the price offered).

6 As noted in Socony-Vacuum, 310 U.S. at 224 n. 59: “[w]hatever economic justification particular price-fixing 

agreements may be thought to have, the law does not permit an inquiry into their reasonableness. They are all 

banned because of their actual or potential threat to the central nervous system of the economy.” See also NCAA v. 

Board Of Regents, 468 U.S. 85, 100 (1983) (“Horizontal price fixing and output limitation are ordinarily condemned 

as a matter of law under an ‘illegal per se’ approach because the probability that these practices are anticompetitive 

is so high; a per se rule is applied when ‘the practice facially appears to be one that would always or almost always 

tend to restrict competition and decrease output.’” citing Broadcast Music, Inc. v. Columbia Broadcasting System, 

Inc., 441 U.S. 1, 19–20 (1979)).
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unravel. The agreement thus amounts to a per se unlawful naked restraint on price competition.

7

 

As Judge Posner explained in In re Sulfuric Acid Antitrust Litigation, “[t]he per se rule is 

designed for cases in which experience has convinced the judiciary that a particular type of 

business practice has no (or trivial) redeeming benefits ever.”8

Whether the initial decision to reduce fill levels was the result of independent decisionmaking has no bearing on the unlawfulness of the parties’ subsequent agreement to maintain a 

united front with respect to Walmart.9 In addition, Walmart’s position as the “largest propane 

exchange tank retailer in the United States”10 does not protect it from coercion. Even a power 

buyer like Walmart is vulnerable when its only two suppliers for a product have secretly agreed 

not to deviate from a proposed price increase.

We continue to believe that pursuing this case was in the public interest. Contrary to 

Commissioner Ohlhausen’s dissent, the private settlements that Blue Rhino and AmeriGas 

entered into resulted in very little benefit to consumers. While the settlement amounts in the 

private litigation noted by Commissioner Ohlhausen may superficially sound impressive, the vast 

majority of the actual funds distributed covered Plaintiffs’ attorneys’ fees, cy pres payments and 

administrative fees and expenses, with only a trivial amount disbursed to consumers. The 

proposed Orders will benefit consumers by prohibiting conduct that could lead to future 

agreements on price or other competitive terms.

 7 See FED. TRADE COMM’N & DEP’T OF JUSTICE, ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG 

COMPETITORS (2000), available at: http://www.ftc.gov/sites/default/files/documents/public_events/joint-venturehearings-antitrust-guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf (“Certain types of agreements 

are so likely to harm competition and to have no significant procompetitive benefit that they do not warrant the time 

and expense required for particularized inquiry into their effects. Once identified, such agreements are challenged 

as per se unlawful.”). 

8 703 F.3d 1004, 1011-12 (7th Cir. 2012) (rejecting per se treatment of agreements on the ground there were 

reasonable procompetitive justifications for the alleged agreement); see also National Macaroni Mfrs. Ass’n v. FTC,

65 F.T.C. 583, 612 (1964), enforced, 345 F.2d 421 (7th Cir. 1965) (agreement between competitors to reduce the 

percentage of more expensive and higher quality durum wheat and increase the percentage of less expensive and 

lower quality farina wheat for pasta held per se illegal).

9 Cf. Sugar Institute v. United States, 297 U.S. 553, 601 (1936) (agreement to adhere to previously announced prices 

and terms of sale held per se illegal, even though the previously announced prices and terms were unilaterally 

determined).

10 Complaint ¶ 35.