FTC Charges Ferrellgas, AmeriGas for Price Collusion

The Federal Trade Commission alleged Thursday that Ferrellgas Partners L.P. (FGP) and AmeriGas Partners L.P. (APU) worked together to reduce the amount of propane in grilling tanks sold to Wal-Mart Stores Inc. (WMT).

The FTC said in a complaint that Ferrellgas's Blue Rhino and AmeriGas colluded to force Wal-Mart to accept a reduced fill level in their grilling tanks. Each company in 2008 had made their exchange tanks more costly by reducing the amount of propane to 15 pounds from 17 pounds, without cutting the wholesale price, the FTC said.

When Wal-Mart refused to purchase tanks from both Blue Rhino and AmeriGas, the two propane companies secretly agreed that neither would back down from their proposal to reduce the fill level to the giant retailer, the FTC alleged.

According to the complaint, sales executives from the companies communicated to update each other their discussions with Wal-Mart and worked together to push the retailer to ultimately accept the fill reduction.

"This type of collusion may not be direct or visible to consumers, but can lead to higher prices or lower quality," said Deborah Feinstein, director of the FTC's Bureau of Competition.

Ferrellgas Partners said in a statement Thursday that the company was disappointed by the FTC's decision to file the complaint.

"These claims are without merit and we will vigorously contest them," the company said.

Representatives for AmeriGas weren't immediately available for comment.

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