The KFTC (Korea Fair Trade Commission) has rejected an appeal by Microsoft to reconsider a multimillion-dollar fine and other penalties levied against the software maker earlier this year.

In February the KFTC concluded a 21-month investigation into Microsoft's business practices in South Korea by ordering the company to pay a 33 billion won (about £18.8m) fine and offer two versions of its Windows XP OS (operating system) in the country, one without Windows Media Player and Windows Messenger and another that includes links to sites offering rival software.

Microsoft was given until 24 August to comply with the decision. In response it filed two appeals: one with the Seoul High Court over the decision and one with the KFTC to reconsider its decision. The KFTC said yesterday that it would not alter its judgement.

"We respect the KFTC's decision. However, Microsoft believes it has complied with Korean competition laws, and has conducted business for the benefit of the consumers in Korea," said Oliver Roll, a regional spokesman for Microsoft in Singapore. "We will continue to defend our position."

Microsoft expects the Seoul High Court appeal to take a couple of years before a final ruling is issued. In the meantime the software giant is looking for the court to issue a stay on the KFTC's judgement so that it won't have to release the new Windows versions in August.

The KFTC investigation was sparked by complaints made to the KFTC by local portal-site operator Daum Communications in 2001 and by RealNetworks in 2004. Microsoft last year settled with Daum in a package valued at $30m (£16m), while it paid RealNetworks $761m (£406m) in an out-of-court deal, but these private settlements weren't enough to stop the KFTC investigation.

Both complaints concerned bundling of software with the Windows OS and the KFTC's ruling will impact the yet-to-be-launched Windows Vista.

"The ruling concerns messenger technology and media player technologies and it would apply to future versions [of Windows], but what it means we can't yet comment on," said Roll.

Click here for the best Microsoft voucher codes.