BRUSSELS—European Union regulators ordered France to recover 1.37 billion euros ($1.5 billion) in state funds from Electricite de France SA after concluding the French electricity supplier had benefited from illegal tax breaks.

The decision, which follows an annulment of a similar 2003 decision by the EU's top court, comes amid a broader crackdown by Brussels on tax avoidance by major companies.

The European Commission, the bloc's top antitrust regulator, said Wednesday that France had failed to levy all the corporation tax due by EDF in 1997, when the company had reclassified some accounting provisions as capital.

That tax break gave EDF "an undue economic advantage compared with other operators on the market and so distorted competition," the commission said in a statement.

"In order to remedy the distortion, EDF must now repay that aid," the commission said.

EU antitrust chief Margrethe Vestager said in a statement that "whether private or public, large or small, any undertaking operating in the Single Market must pay its fair share of corporation tax."

The commission polices the bloc's state aid rules, which prohibit state support that favors some companies over others.

Write to Tom Fairless at tom.fairless@wsj.com

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