* EU court: EU regulators wrongly classified aid as illegal
* Olympic Airways/Airlines need not repay 131.5 million euros
LUXEMBOURG, Sept 13 (Reuters) - Greece does not need to recoup part of the state aid given to former national airline Olympic Airways because EU regulators wrongly classified it as illegal, Europe's second-highest court said on Monday.
The General Court was ruling on a legal challenge brought by the Greek government and the airline against a 2005 decision by the European Commission on millions of euros of state aid granted to Olympic since December 2002.
"The General Court annuls, in part, the Commission's decision relating to state aid granted to Olympic Airways and Olympic Airlines," the Court said.
"The Commission did not examine the relationship between the rents paid by Olympic Airlines for the sub-leasing of aircraft and market rents and failed to examine individually the value of various intangible assets transferred to that company as part of the restructuring of Olympic Airways," it said.
The court said the two companies were not liable to repay 131.5 million euros ($168 million) as the sum had been improperly classified as illegal state aid.
It is now up to the Commission to decide what to do next. The Commission could not be immediately reached for comment.
In its 2005 decision, the Commission, the European Union's competition watchdog, had ruled that the aid given by Greece to Olympic Airways and Olympic Airlines, a new carrier that took over some of the former's operations, was an unfair advantage.
The regulator ordered the airlines to pay back about 160 million euros to the Greek state, with the exact amount to be determined later. The newly named Olympic Air, which was sold to buyout firm Marfin Investment Group last year, unveiled plans in February to merge with local rival Aegean Airlines. The Commission is now examining the deal, with a decision expected by Dec. 7. ($1=.7816 Euro) (Reporting by Foo Yun Chee; Editing by Jon Loades-Carter)