General Electric (NYSE:GE) filed a lawsuit against its power rival Siemens Energy (OTC:SMEG.F) on Thursday. The suit alleges that Siemens Energy used stolen trade secrets in order to win contracts to supply gas turbines and services to utilities.
GE's accusation centers around a confidential bid it made to supply gas turbine equipment and servicing to Dominion Energy. Allegedly, a Dominion Energy employee unlawfully sent technical details, pricing data, and information on how GE would service turbines to a Siemens account manager. According to the lawsuit, the Siemens manager then "used GE's trade secrets to improve Siemens' own bid, ultimately winning a lucrative contract to provide gas turbine units and maintenance services in Virginia worth at least $225 million, and potentially as much as $340 million."
Moreover, GE alleges that its industrial rival waited sixteen months before disclosing to GE that it owned the trade secrets, during which time Siemens won "at least eight" gas turbine contracts. All in all, GE feels that the theft of trade secrets has helped Siemens to win "billions of dollars of contracts."
What it means
The lawsuit is big news in an industry dominated by GE, Siemens Energy, and Mitsubishi. Given that the gas turbine market has halved over the last five years, there's significant overcapacity in the industry and every contract is fiercely fought over.
GE's legal action may reduce a competitive disadvantage it feels it's suffered as a consequence of Siemens' actions. That could be good news for GE's power business, as CEO Larry Culp seeks to improve profit margin across the whole company.