In a largely improvised speech, the French president honoured the 2008 laureate of the prestigious Charlemagne Prize and sought to erase EU-related frictions that have overshadowed relations between Berlin and Paris in the past year.
"We must not let misunderstandings and contradictions deepen rifts between France and Germany," Sarkozy said, after expressing his respect and admiration for Merkel.
He firmly denied media reports on tense relations between himself and the German chancellor. Instead, he said they were a "harmonious couple." In response, Merkel, who last year held the European Union's six-month presidency, thanked Sarkozy for standing by Europe.
On accepting the prize, she insisted "Europe was and will be our common destiny."
Sarkozy also seized the opportunity to assure his audience of prominent European politicians he was firmly committed to the EU.
"France will not work for itself but for Europe," he said, urging the EU to bring forth an integrated immigration and defence policy.
He disclosed his plans for the EU presidency, which France will take over for six months from July 1.
Twelve member states, including France and Germany, recently ratified the Lisbon Treaty of 2007, aimed at reforming decision-making in the 27-member European Union. It replaces a 2005 draft constitution rejected by France and the Netherlands in 2005. All EU member states must ratify the treaty before it can come into effect next year.
Meanwhile, differences aside, France and Germany have agreed to work together as Paris prepares to assume the bloc's presidency, European officials said.