Bautista slid into his fellow Spaniard's Yamaha on the first corner of the first lap, causing both bikes and riders to end up in the gravel and out of the race.
International Motorcycling Federation (FIM) stewards upheld the decision following an appeal from Bautista's San Carlo Honda Gresini team, confirming that Bautista will start from last position at the Sachsenring next Sunday.
Lorenzo, 25 points behind championship leader Casey Stoner, was still unhappy about the incident.
"I think it's a complete disaster," he told the official MotoGP website (www.motogp.com).
"The move he did was a disaster, but the decision that race direction is taking is even more sad. Every time it does not penalise riders so they can learn in the future.
"Starting the next race in last position is not enough to learn from.