EU regulators are to investigate whether Italy's rescue loan to ailing national airline Alitalia is illegal.
The European Commission warned that Italy's 300-million-euro (US$467 million) bailout for the airline may break EU rules setting limits on public aid for companies.
Italy is banned from offering state aid to the airline until 2011, because of past bailouts.
"As Alitalia has already benefited from rescue and restructuring aid, Italy cannot, in principle, grant it any more aid," the EU executive said.
But Rome says the emergency funding is necessary to keep the airline flying for another year.
The airline is losing 2 million euros a day.
EU regulators said the loan of public money could give the company an unfair advantage over rivals and it would look at whether Alitalia would have got the loan from a private investor.
They said its investigation will give other companies a chance to send the EU their comments and will examine in detail the conditions of the loan.
The loan aims to keep Alitalia flying and out of bankruptcy protection while a new bidder can be found after Air France-KLM walked away from a takeover bid.
Italian Premier Silvio Berlusconi, who opposed the Air France-KLM deal and promised to keep Alitalia in Italian hands, has pledged to come up with a group of investors to relaunch the airline with an industrial partner. However, no commitments have been announced.
The airline is 49.9 percent owned by the government.