Two Propane Gas Companies Conspire Against Walmart - And Lose
By Amy E. Feldman
PHILADELPHIA (CBS) - What do Blue Rhino and AmeriGas have in common? An FTC complaint about the gas they pass.
The Federal Trade Commission just settled a complaint it had filed against Blue Rhino and AmeriGas, makers of those propane tanks you use in your barbeque grill. The charge was based on the fact that they had agreed to pass less gas.
The two companies, who together account for 80 percent of the sales of wholesale exchange propane tanks, had each decided to raise their prices by reducing the amount of gas in each tank they sold to Walmart from 17 pounds to 15 pounds without reducing the price.
When Walmart pushed back, the two competitors secretly agreed to maintain a united front against Walmart. Which sounds too much like smart business tactics. And there's no law preventing companies from raising prices. So what's illegal about it?
In the US, laws favor competition because as product manufacturers compete with each other, prices drop and consumers win. So when competitors conspire with each other to set prices, it prevents competition and is a violation of antitrust laws.
Lots of businesses get caught up in these laws when they join trade associates and talk about their products or pricing with each other. So don't discuss your prices with your competitors. And, don't agree with your competitors to stay out of each other's turf because as the gas companies found, having to fight an FTC complaint really stinks.