I almost posted that same reaction. However, when reading the article, it seems that France is actually instigating an action/plan that is referred to as a battle. I don't think it was by mutual agreement, the way "takes on" is often used, like in soccer. "France takes on Germany in the quarter-finals tonight".
Challenge implies that France expects Germany to "respond" somehow. France isn't really challenging/attacking Germany per se, just trying to become number one in a field where Germany is currently number one.
I don't think so! It's a "journalistic" headline that summarizes, in a way, what France is trying to accomplish but they are not actually doing anything to Germany. They want to accomplish something bigger than Germany accomplishes.