Laurent Fabius, France's foreign minister, has intervened after French telecoms giant Orange said it wanted to withdraw its brand from Israel, spurring Prime Minister Benjamin Netanyahu to demand that Paris distance itself from the company's "miserable" decision.
Fabius said on Friday that France opposed any boycott of Israel but stressed that Orange was free to define its own policy.
"While it is up to the president of the Orange group to define the commercial strategy of its company, France is firmly opposed to any boycott of Israel," he said in a statement.
"Moreover, the position of France and the European Union on settlements is consistent and widely known."
Settlement building in the territories occupied by Israel in 1967 are illegal under international law.
Orange's statement on Thursday that it wanted to withdraw from Israel came just hours after its chief executive was accused of giving in to a pro-Palestinian campaign.
The company, which is partly controlled by the French government, insisted that its decision to end its brand-licensing agreement with Partner Communications, Israel's second largest mobile operator, was not politically motivated.
France in June 2014 issued a warning to French investors that investments in Israeli settlement areas carried legal risks, a move which had already raised concerns in Israel.
Stephane Richard, Orange's chief executive, said earlier this week that the company was willing to withdraw the Orange brand from Israel "tomorrow morning," but moving too quickly would expose his company to legal risks and possible financial penalties.
As Israeli officials accused the company of bending to a pro-Palestinian boycott movement, Orange stated that any move to terminate the accord with Partner Communications was a business decision, not a political one.
Netanyahu responded by demanding France "publicly renounce the distressing statement and action" taken by Orange.