Controversy was at the forefront of a summit of EU leaders, designed to draw up plans on energy, jobs and growth, which started on Thursday.
Silvio Berlusconi faces a general election in April
The two-day meeting on co-operation and reform is being overshadowed by a simmering row over protectionism.
France and Italy have clashed over a deal to merge two French energy firms, which critics say thwarts competition.
Italy has failed to persuade EU leaders to issue a declaration condemning so-called "economic nationalism".
The European Commission is examining if France broke EU laws when it brokered a merger of state-owned Gaz de France and private utility Suez in February, to fend off a possible bid from Italy's Enel.
In a moment of dischord, French President Jacques Chirac briefly walked out of an evening session when a fellow Frenchman chose to address the delegates in English.
Italian Prime Minister Silvio Berlusconi, who faces a general election in April, said he would not raise at the summit France's role in matchmaking a merger of the two French energy giants.
But one of his coalition partners, parliament speaker Pier Ferdinando Casini, denounced any government that restricts cross-border takeovers as a "pretend European".
"Either you are a pretend European, and therefore in favour of protectionism and nationalism, or else you are a real European and want to stimulate competition," he said at a pre-summit meeting of EU conservative leaders.
And German Chancellor Angela Merkel said: "We can only have an internal market when electricity flows freely and when we accept European champions and not just think nationally."
But French officials said President Jacques Chirac rejected any protectionist labels.
However, he did say the EU should actively promote "European champions" in energy.
"The construction of a Europe of energy cannot be confined to the liberalisation of markets," he told the summit, in notes later released by his staff.
"We must do everything to encourage the development of European champions, based on solid industrial ambition and not on a purely financial approach," he said.
Mr Chirac's protest came when Earnest-Antoine Seilliere, the French president of UNICE, the employers' organisation, said he would address the meeting in English "because that is the accepted business language of Europe today".
A French official said Mr Chirac, Foreign Minister Philippe Douste-Blazy and Finance Minister Thierry Breton left the room.
Mr Chirac returned after Mr Seilliere had finished and remained as another Frenchman, European Central Bank President Jean-Claude Trichet, addressed the leaders in French.
European Commission President Jose Manuel Barroso has said economic nationalism has no place in the EU's single market but there are "growing pains" in the internal market.
He has called on EU governments - several of which have openly opposed foreign takeover deals in the steel, banking and energy sectors - to tone down nationalist rhetoric.
The Austrian Presidency wants the summit to focus on job creation, cutting bureaucracy and investment in skills and scientific research.
Despite the outlook for many EU economies starting to improve, France and Germany are still suffering from high unemployment.
The EU's record of job creation since it launched the Lisbon Agenda - a 2000 plan aimed at transforming Europe into the world's largest economy - has been poor.