The European Commission on April 23 opened an investigation into whether Italy’s €900 million bridge loan to national flag carrier Alitalia was legal under EU regulations.

The Commission received a number of complaints in 2017 alleging that the loan was, in fact, aid that the Italian government extended to Alitalia and did not comply with EU regulations.

Aid granted by a Member State keeps companies in financial distress afloat, but also has the potential to distort competition in the EU Single Market, while shifting the burden of structural adjustment to others and putting the more efficient and innovative players who receive no such aid at a disadvantage.

Competition Commissioner Margreth Vestager, said the EU executive’s duty is “to make sure that loans given to companies by the Member States must be in line with EU rules on state-sanctioned aid. We will need to investigate whether this is the case for Alitalia.”

The Italian government granted a loan to Alitalia in January 2018 as part of a rescue package that was thought at the time to have followed the EU’s regulations on state loans. According to the Commission, however, what was originally thought to have been a loan may instead have constituted state aid.

The Commission will now look into whether the loan satisfies the conditions under EU Guidelines.