Fiat Chrysler had already agreed to grant the government a seat on the new company’s board as well as a veto over appointments of future chief executives. It also agreed to base the company’s headquarters in Paris.

Fiat Chrysler did not consider those requests to be deal breakers, although it viewed its original offer as generous, given that Fiat Chrysler would be contributing more than Renault in profitability, production and market capitalization.

John Elkann, the Fiat Chrysler chairman, met with government officials in Paris over the weekend, promising that a deal wouldn’t lead to factory closures.

But a person briefed on Fiat Chrysler’s reasons for withdrawing said the company’s negotiators felt hemmed in by some of the government’s demands, including commitments on numbers of jobs.

And Mr. Elkann was intent on ensuring that a combined company would not be seen as politically influenced — a perception that had long plagued the relationship between Renault and Nissan. The government’s current 15 percent stake in Renault — the largest of any shareholder — was to be reduced to 7.5 percent in the combined company, a move meant to signal to investors that its board would place a priority on shareholders.

That stance rattled Renault’s French labor union, whose representative planned to abstain from a vote. The union earlier warned that stripping the government of its majority stake in Renault could give Fiat the power to favor operations in Italy over France. At least 22,000 jobs have been shed at Renault in France since 2005, the union said.

In two days of meetings at Renault’s headquarters in Paris, its chief executive, Jean-Dominique Senard, sought to convince its board of the financial and industrial merits of a deal. And earlier Wednesday, Mr. Le Maire said there was no need to rush the merger talks. “We should take our time to make sure that things are done well,” he told the French news channel BFM TV. “We want to do this merger.”