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Veolia Loses Bid to Block RWE Sale of Berlin Water Stake

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May 30 (Bloomberg) -- Veolia Environnement SA lost a German court bid to block RWE AG from selling its share of the companies’ joint stake in Berlin’s water utility to the city government.

The Berlin Regional Court rejected the suit after hearing arguments in the case. Presiding Judge Hartmut Gieritz said the joint-venture agreement didn’t bar either side from selling their respective stakes. He also rejected Veolia’s argument that RWE acted in bad faith by seeking to sell to the city of Berlin which also sets rules for water pricing.

“The agreement protects Veolia by forcing any new shareholders to assume all the duties that RWE now has -- and that’s about it,” said Gieritz. “If the parties would have wanted to bar the city of Berlin from ever acquiring such a stake, they should have made that plain in the language of the agreement.”

RWE, Germany’s second-largest utility, and Veolia in 1999 acquired 49.9 percent in the BWB Wasserbetriebe water company, Germany’s largest, for 1.7 billion euros ($2.1 billion). Berlin’s city government said last year that RWE offered to sell its 24.95 percent stake for about 800 million euros. Berlin is trying to regain control of the 150-year-old city water supplier to curb water charges.

Veolia spokeswoman Marie-Claire Camus declined to immediately comment on the ruling.

Stirred Protest

The utility’s part privatization had stirred protest among Berlin citizens who in 2007 started an initiative which eventually forced the government to hold a referendum for disclosing the terms of 1999 agreement. The initiatives claim the deal is responsible for high water costs for consumers. The city passed a law in 2010 allowing disclosure and the agreement was posted on the Internet.

Last month, Germany’s antitrust regulator told BWB that its water charges are too high and should be cut on average by 20 percent. For the period of 2012 to 2015, BWB should lower prices by a total of about 292 million euros, the cartel office said. BWB has said it’s calculating it prices according to the applicable local laws.

Today’s case is LG Berlin, 99 O 50/12.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.