Danone has labelled a lawsuit against the company from a trade union claiming to represent workers at its drinks venture in China "totally groundless".

Reports in China claim that a Wahaha trade union has started legal action against Danone for allegedly holding shares in firms that compete directly against the French group's venture.

Danone told just-food today (17 December) that it had yet to receive the legal papers but still dismissed the union's claims. "Having not yet received the legal documents from the court, we are currently not in a position to provide a legal response," Danone said. "However, based on the press report, our lawyer's initial feedback is that this is a totally groundless claim."

The lawsuit is the latest twist in Danone's increasingly bitter dispute in China. Danone joined forces with Wahaha in 1996 and has a 51% stake in the original venture.

Relations between the two sides turned sour after Danone accused its partner of selling drinks under the Wahaha trademark outside the venture without permission.

In May, Danone filed for arbitration against Wahaha in Sweden in a bid to resolve the dispute.

Last week, a court in Hangzhou ruled that the period under which Danone could file its case against Wahaha had lapsed.

Danone said it still believed in an "amicable solution" to the dispute. "We urge all the parties to avoid taking any actions which will further intensify or complicate the situation, and work together aiming to bring about an amicable settlement as soon as possible."