Sarkozy made his comments as he unveiled new policies aimed at halting the decline in French industry, which included a promise for a more active government role in companies where the state is a shareholder.
"I want the conception of European competition to move forward," he said, saying that the policy should be looked at on a European level and not at the level of an individual country.
"Otherwise how do we create big European groups? Which big group in the world can conquer export markets without first being dominant in its own domestic market?" he asked. He said Europe had lost the battle for consumer goods contracts and was facing increasing competition on major industrial contracts.
A consortium led by EDF, GDF Suez and including Total and Areva was dealt a blow in December when the United Arab Emirates picked a South Korean group to build four nuclear reactors, symbolising the problems facing French industry.
"We cannot be the only world economic zone which unilaterally applies the precepts of free trade, totally ignoring the behaviour of its big competitors," he said.
France, which has a tendency for state intervention in company policies, has fallen foul of EU competition rules several times in recent years.
The European Commission angered the government last year when it held up approval of a French state aid plan to help carmakers survive the financial crisis.
Sarkozy also said Economy Minister Christine Lagarde would make proposals to the European Commission in the next three months to strengthen the EU's anti-dumping rules.
When he came to power in 2007, Sarkozy successfully lobbied for having the words "undistorted competition" deleted from the objectives of the future EU Treaty, triggering fears in the UK that the EU could turn its back on free trade (EurActiv 27/06/07).
(EurActiv with Reuters.)
