No. Since there is a German unit, the combat is not limited to just the French. The CW can and must join in too.
9.9. MULTIPLE STATES OF WAR
However, you resolve, as one combat, a combat that includes units that are not at war with each other, so long as each unit included is at war with at least 1 enemy unit in the combat.
Example: A combat includes a Commonwealth and a U.S. naval unit against a Japanese and a German unit. The U.S. is at war with Japan and the Commonwealth is at war with Germany. You fight this as one combat even though U.S. units can’t fight Germans and Japanese units can’t fight Commonwealth. The Japanese unit is sunk. In the next round, the U.S. unit isn’t included because it can’t fight German units
Since there are Italian and German units and French and CW units in your example, everyone fights everyone, and the Italians do not get the benefit of surprise. If the German unit weren't there, then the CW units would not be included, and the Italians would get the benefit of surprise.
I thought I knew how to play this game....