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.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires