The Virgin Megastore, which is always filled with shoppers on Sundays, was ordered on Wednesday to pay Fr4m ( pounds 450,000) in fines every time it opened on the legal rest day. This compared with a Fr250,000 fine imposed last month.
The court action was brought by the CFDT and CGT trade unions, which will share the fine money.
However, Virgin received high-level backing from Jacques Toubon, the culture minister, who said the Megastore should be considered an exception since it provided access to cultural goods in an important tourist district. Earlier, Michel Giraud, the labour minister, said he would not interfere with the decision of the courts. Mr Giraud did say, however, that parliament would debate Sunday trading, currently outlawed under a 1906 law, after the summer.
Last year the previous Socialist government gave Virgin a special permit to open its Champs-Elysees store for one year because of its central location.
Mr Branson told the Reuters news agency that, if the court order was maintained, he would abandon a plan to create 40 shops in France in the next three years, providing 1,000 jobs, since the loss of Sunday trading in Paris would turn his French operations into a loss-making concern.
Virgin, with shops in Bordeaux, Toulon and Marseilles as well as Paris, employs 650 in France. About one-third of the 350 Paris employees demonstrated this week for the right to work on Sundays.
In an otherwise quiet holiday period, Mr Branson's troubles captured the headlines. The front-page cartoon in Le Monde showed a manager at the Megastore asking a robed judge surrounded by television crews in front of the shop: 'How much do we owe you for the publicity?'
Le Monde said in a commentary that Mr Branson's threat to withdraw from France amounted to 'unacceptable blackmail'. Despite the recession and an 11.6 per cent unemployment rate, 'must we deregulate labour law in France willy-nilly?' it asked.
Le Monde said that the Virgin affair had become 'the symbol of what should not be allowed to happen: to deal in the heat of the moment - and under pressure - with a fundamental question and a problem of society.'
The climax to the whole affair had been reached by Mr Branson, who had vowed 'to fight to the end to obtain the opening of the Champs-Elysees shop in repeated defiance of the law'.