AmeriGas, Blue Rhino Hit With Price-Fixing Class Action Lawsuit

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A class action lawsuit has been filed by an Ohio ACE Hardware in a Kansas federal court against AmeriGas and Ferrellgas, which owns Blue Rhino, alleging that the two companies practice price fixing and violate antitrust laws.

The AmeriGas class action lawsuit was filed by Cefo Enterprise Corp., which operates an ACE Hardware in Middleburg Heights, Ohio, and purchases propane exchange tanks from AmeriGas and Blue Rhino that it sells to its customers.

These propane tanks are sold to its customers to use for their grills, heaters, mosquito magnets, and other types of equipment that use propane gas. Both AmeriGas and Blue Rhino sell propane tanks to stores such as hardware stores, gas stations, convenience stores and grocery stores.

Cefo Enterprise alleges that due to an “unlawful conspiracy,” the company “paid artificially inflated and fixed prices for propane in exchange tanks.” Cefo also alleges that the two companies are violating antitrust laws.

According to the propane gas class action lawsuit, AmeriGas and Blue Rhino control 80 percent of the propane gas market.

When retailers sell propane tanks to customers, the customers bring the tanks back when the tank is empty in exchange for a filled tank. Those empty tanks are then sent back to AmeriGas or Blue Rhino, who then refill, refurbish or replace the tanks and return filled tanks to the retailers.

“Blue Rhino and AmeriGas conspired to fix the price of propane sold by agreeing to reduce the amount of propane in propane exchange tanks, thereby raising the per-pound price of propane across the country,” the class action lawsuit alleges.

According to the propane tank class action lawsuit, the price fixing practice began in 2008.

“Until 2008, Blue Rhino and AmeriGas both filled their propane exchange tanks with 17 pounds of propane,” the lawsuit states. “In 2008, Blue Rhino and AmeriGas conspired to reduce the fill level to 15 points, thereby effectively raising the price of propane sold in propane exchange tanks.”

When Blue Rhino and AmeriGas decreased the fill amount, the two companies did not decrease their prices and “were able to maintain the same price per ‘full’ tank, and thus increased their margins on the sale of propane exchange tanks.”

This is not the first class action lawsuit filed against Blue Rhino and AmeriGas with price fixing and antitrust allegations.

AmeriGas reached a class action settlement in 2010 in a lawsuit alleging that the propane gas company was “under-filling” it’s propane tanks.

Blue Rhino faced a similar class action lawsuit settlement in 2012.

Cefo alleges that Blue Rhino and AmeriGas enacted their “conspiracy” first by targeting larger customers such as Lowe’s and Wal-Mart, “knowing that once they were forced to accept the reduced fill, all purchasers would have no choice but to accept this de facto agreed-upon price hike.”

The Federal Trade Commisstion (FTC) issued a complaint against Blue Rhino and AmeriGas in March over the agreement by the two companies to reduce the amount of propane in the tanks.

The FTC said that the “‘conduct has restrained price competition and led to higher prices for sale of propane exchange tanks in the United States.'”

This class action lawsuit is for any person or company who “purchased propane in propane exchange tanks” directly from AmeriGas or Blue Rhino from July 21, 2008 and the present.

Cefo’s is charging AmeriGas and Blue Rhino with violating section one of the Sherman Act.

Cefo is represented by James P. Frickleton and Edward D. Robertson III of Bartimus Frickleton Robertson & Goza PC.

Counsel information for the defendants is not available at this time.

The Propane Gas Tank Class Action Lawsuit is Cefo Enterprise Corp. v. Ferrellgas LP et al., Case No. 2:14-cv-02362, in the U.S. District Court for the District of Kansas.