AmeriGas Partners LP and Ferrellgas LP, the parent company of Blue Rhino, are being accused by some direct buyers of propane of having conspired to increase the price of propane that is sold in propane exchange tanks, also known as exchangeable steel tanks. Accusations involve activities that allegedly go back as far as 2008 and involve price fixing activities that raised the price of the propane to consumers by 13 percent.
Ferrellgas and AmeriGas combined, control most—80 percent—of the United States propane market.
Our firm is pursuing lawsuits on behalf of consumers, including small businesses, that sell filled propane exchange tanks, such as gas stations, convenience stores, grocery stores, and hardware stores, to name just some. These businesses must have purchased the pre-filled tanks directly from one of the following on or after July, 2008. The brand names of the tanks involved are Blue Rhino and AmeriGas:
- Ferrellgas L.P.: Delaware Corporation—Headquarter: Overland Park, Kansas
- Ferrellgas Partners, L.P. Delaware Limited Partnership—Headquarter: Kansas
- AmeriGas Propane L.P.: King of Prussia, Pennsylvania
- AmeriGas Partners L.P. King of Prussia, Pennsylvania
- UGI Corporation: Parent company of AmeriGas; King of Prussia, Pennsylvania
Price Fixing Scheme Cost Consumers
The scheme was maintained because both firms—the country’s two largest suppliers of propane exchange tanks—allegedly charged the same amount per tank while dropping the amount of propane in their tanks by two pounds—from 17 to 15 pounds. There was, allegedly, no drop in pricing, which raised the cost to consumers.
Conspiracy to fix prices is a violation of Section 1 of the Sherman Act. The Federal Trade Commission (FDC) alleges that, until 2008, Blue Rhino and AmeriGas filled their tanks with 17 pounds of propane. Beginning no later than spring 2008, both firms initiated a plan to drop that fill level to 15 pounds per tank while maintaining the same price per each so-called “full” tank. This would effectively increase their propane exchange tank sale margins, leading to a 13 percent increase in consumer costs.
Blue Rhino Price Fixing Lawsuits Mounting
In one case, allegations include that consumers were never advised of the lowered fill levels and were
also shortchanged out of propane. That lawsuit, brought in 2009 and settled in 2012, settled for approximately $25 million.
A more recent case makes more detailed accusations in addition to allegations that the companies collaborated in the price fixing scam. For example, allegations include that AmeriGas and Ferrellgas conspired to deeply fix prices, violating both state and national antitrust laws. Not surprisingly, representatives for both Ferrellgas and AmeriGas deny involvement in a price fixing scheme.
According to the lawsuit, the price of propane and the cost of conducting business increased in 2008. Ferrellgas, which does business as Blue Rhino, started to consider minimizing its fill levels, the allegations indicate. Also according to the allegations, Ferrellgas was unable to bring Wal-Mart Inc. to accept its tanks at the reduced levels; Wal-Mart is one of Ferrellgas’ largest buyers. With their collaborative approach, they were able to ultimately ensure that Wal-Mart accepted the 15-pound tanks, the lawsuit indicated. Wal-Mart accepted the reduction in fill levels in October 2008. This, in turn, raised the price of propane for consumers.
The allegations also include that executives at Blue Rhino illegally advised AmeriGas that it intended to drop its fill levels with no related decrease in pricing.
The initial settlement involved consumers who had purchased Blue Rhino tanks between June 15, 2005 and October 13, 2011 and AmeriGas tanks between June 15, 2005 and November, 30, 2009.