The English official was the centre of attention after awarding a late penalty to the hosts in the second leg of their Champions League quarter-final tie at the Santiago Bernabeu in April.
Oliver's decision to blow for a foul by Medhi Benatia on Madrid substitute Lucas Vazquez led to a furious reaction from Juve goalkeeper Gianluigi Buffon, who was sent off for his vociferous protestations.
Cristiano Ronaldo scored from the spot to send the holders through, with Oliver and his wife subsequently the target of social media abuse from upset fans.
Collina, who selected Oliver for the high-profile tie, has backed the 33-year-old, insisting he made the right decision.
"It was a penalty correctly given," Collina told the Daily Telegraph.
"It's an interpretation of the incident. The referee saw what happened, he made an assessment and made a decision.
"I can only say one thing - the referee for that match had 199 Premier League matches at that point. I refereed 240 matches in Serie A."
Despite defending Oliver, Collina conceded the standard of refereeing across Europe had dropped during the 2017-18 campaign.
"We were expecting another successful season," he added. "We have to admit and be honest when things don't go as expected. Some things were not as expected.
"We are already working for the next season. We are trying to understand why we were not as successful as before. It would be easy for us to say we were unlucky. Being lucky is one of the reasons you are successful but it's not the main reason.
"We need to build up new referees and offer them experiences. Building up a reputation and a name, it's a matter of how you are known. When there is change it can happen that a season is not so successful."