French meat processing company Spanghero knowingly sold horsemeat labelled as beef, the French government has said.
Spanghero's licence is being suspended while an inquiry continues, Agriculture Minister Stephane Le Foll said.
The firm has denied the allegations, saying it only ever dealt in meat it believed to be beef.
A widening scandal over mislabelled horsemeat has affected at least 12 European countries.
In the UK, three people have been arrested on suspicion of fraud in connection with the sale of horsemeat.
Two suspects were detained at a meat processing plant near Aberystwyth in Wales, and a third was arrested at an abattoir in West Yorkshire.
The French government believes that the sale of horsemeat labelled as beef went on for six months and involved about 750 tonnes of meat.
Spanghero imported meat from Romania and sold it on to another company, Comigel, which made frozen ready meals at its factory in Luxembourg.
French Consumer Affairs Minister Benoit Hamon said the meat had left Romania clearly and correctly labelled as horse. It was afterwards that it was relabelled as beef.
"From the investigation, it would seem that the first agent or actor in this network who stamped 'beef' on horsemeat from Romania was Spanghero," Mr Hamon said.
There was "no reason to doubt the good faith" of the Romanian abattoir that originally provided the meat, Mr Hamon added.
The investigation says some blame may rest with Comigel, which made the ready meals sold around Europe.
Staff there should have noticed anomalies in the paperwork, and realised from the smell and look of the meat once it was defrosted that it was not beef, Mr Hamon said.
Spanghero has strongly denied wrongdoing.
"Spanghero confirms having placed an order for beef, having been led to believe it received beef, and having sold back what it thought was beef, properly labelled as such, in line with European and French regulations," the company said in a statement.
The latest country to be hit by the crisis is Germany, where some supermarket chains have removed frozen lasagne from sale after traces of horsemeat were detected.
The widening scandal has raised questions about the complexity of the food industry's supply chains across Europe.
The UK has asked the European investigative agency Europol to co-ordinate a Continent-wide investigation into an alleged international conspiracy to pass horsemeat off as beef.
On Wednesday the EU urged member states to conduct random DNA tests for horsemeat in beef products from 1 March.
EU Health Commissioner Tonio Borg said the programme of random tests should report after 30 days, but testing should continue for three months.
Mr Borg was speaking after a meeting in Brussels with agriculture ministers from affected countries.
He said member states should also test for the presence of the veterinary medicine phenylbutazone - known as "bute".
The painkiller is used to treat horses - particularly racehorses - but is considered potentially harmful to humans.
On Thursday, Britain's Food Standard Agency - the FSA - said tests eight horses that were killed in the UK had tested positive for bute, and six may have entered the food chain in France.
But England's chief medical officer said the highest level detected posed "very little risk to human health".
The prime minister's spokesman said the UK was working closely with the French authorities to track the carcasses.
French food producer makes order
Comigel HQ in Metz, north-east France, asks its subsidiary, Tavola in Luxembourg, to make food products - including beef lasagne for Findus.
Factory orders meat
The Tavola factory orders the meat from Spanghero in the south of France.
Spanghero contacts a subcontractor in Cyprus to source the meat.
Subcontractor enlists trader
The Cypriot subcontractor in turn contacts a trader in the Netherlands.
Trader orders from Romania
The trader in the Netherlands places an order for meat with abattoirs in Romania.
Abattoirs send meat to France
The meat from the abattoirs travels to Spanghero in France. However, Romania rejects claims that it was responsible for wrongly describing the horsemeat from its abattoirs as beef. Horsemeat is always labelled as such, they say. The Romanian authorities claim records show orders had been for horse carcass - easily distinguishable from beef.
Meat used to make products
Spanghero sends the meat to the Comigel subsidiary’s factory in Luxembourg before the finished products are supplied to Findus and retailers across Europe, including the UK. The president of Comigel says the company was unaware the meat was coming from abroad.
Horsemeat found in Ireland and UK
Tests by Irish authorities have found equine DNA in beefburgers made by firms in the Irish Republic and the UK. Traces of horsemeat have also been found in stored meat at another plant in Ireland and one in Northern Ireland. In mainland Britain, police and officials probing alleged horsemeat mislabelling have carried out raids at a slaughterhouse in West Yorkshire and a meat firm near Aberystwyth. Three men were later arrested on suspicion of offences under the Fraud Act..