The European Commission will find out if a French state loan guarantee helped France's Areva win a contract to build the first new European reactor in more than 10 years in Finland.
Environmental campaigners sparked the EU probe by complaining that French help for Finnish power company Teollisuuden Voima Oy was a government subsidy banned under EU rules.
But EU regulators said their investigation showed the French government's guarantee for the EUR570 million bank loan was above board.
"Neither Areva nor TVO have derived an unfair advantage from the state guarantee, which does not constitute state aid," said EU Competition Commissioner Neelie Kroes.
TVO could have financed the loan without French aid, which was not given at a cut-price rate that would have been an unfair advantage over rivals, the EU said.
It had opened an investigation last year after complaints from Greenpeace and the European Renewable Energy Federation about the guarantee the French state export credit insurance agency Coface gave to TVO to buy equipment from France's Areva-Framatom.
Greenpeace's Jan Havercamp criticised the ruling and claimed that French government favors the nuclear industry above other types of power, discouraging investment in renewable energy.
The EU examined if the guarantee had cut TVO's financial costs below normal market levels - and could have encouraged the company to pick Areva and German partner Siemens to build a nuclear plant at Olkiluoto in Finland that is due to start work in 2011.
Despite delays and budget overruns, the Finnish atomic station is a key project for the nuclear power industry as European countries weigh up replacing or phasing out older plants.
France - which relies on nuclear for most of its electricity - and state-owned nuclear power plant supplier Areva champion atomic power as a homegrown solution to rising imports of expensive oil and natural gas.
They also claim it is environmentally friendly because plants do not release the carbon dioxide linked to climate change.
Opponents point to high construction costs and worries over storing toxic nuclear waste.
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