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Chinese valve company accused of unfair trade practices

China-based Neway Valve Co. allegedly uses pirated software to undercut Oklahoma manufacturers, according to a lawsuit filed by the Oklahoma attorney general’s office.
By Jay F. Marks, Business Writer Modified: March 13, 2014 at 10:05 pm •  Published: March 14, 2014

A Chinese oil equipment supplier on Thursday was accused of artificially lowering prices by using pirated software.

Neway Valve Co. used unlicensed software to help it sell its products for significantly less than Oklahoma valve manufacturers serving the oil and natural gas industry, according to a civil lawsuit filed in Oklahoma County District Court.

“Defendants are able to sell comparable products for approximately 13 percent less than the Oklahoma manufacturers’ discounted price,” the lawsuit filed by state Attorney General Scott Pruitt contends. “Some of this must be attributed to the defendants’ lowering their cost of production by illegally using unlicensed software.”

Neway could not be reached for comment Thursday.

Valve makers increasingly rely on software to design, manufacture, market, ship and service valves used in the oil and gas industry, according to the lawsuit. The competitive sector functions on thin margins, impacted by the cost of maintaining software licenses.

Neway purchased only 380 software licenses from one U.S. company, but a Hong Kong company’s investigation indicated it had as many as 1,400 computers for its Chinese operations, according to the lawsuit. Each computer is supposed to have a licensed version of the software.

The lawsuit accuses Neway of unfair competition and violating the state’s Deceptive Trade Practices Act and Antitrust Reform Act. It seeks to block Neway from operating in Oklahoma until it proves it is complying with the law, with triple damages and investigative costs.

Neway, which was founded in 1997, is China’s largest industrial valve manufacturer, with three major production plants, four foundries and a research and development center. It launched an initial public offering in January, raising about $241 million, according to the company’s website.

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