The Taiwan Fair Trade Commission launched an investigation in April into allegations that Samsung was paying students to post negative online comments about HTC devices. At the same time, Samsung allegedly paid the students to recommend Samsung cell phones. The commission said that this type of behavior is akin to false advertising.
Along with fining Samsung, the commission also fined two Taiwanese trading companies it claims were responsible for the Internet campaign.
Samsung said in a statement that it's "disappointed" in the Taiwan FTC's decision.
"However, we remain committed to engaging in transparent and honest communication with consumers," Samsung said. "Samsung Electronics Taiwan is carefully reviewing the decision and will take all necessary steps to protect our reputation as a company which values its customers. Samsung Electronics Taiwan will continue to provide exceptional value for consumers in Taiwan through a wide variety of innovative products and services."
The decision comes as Taiwan-based HTC finds it tougher to compete with Samsung. The company earlier this month reported its first quarterly loss since going public in 2002. While its products arguably stand toe-to-toe with the top-of-the-line iPhone or Galaxy S smartphones, HTC has found itself too small to rival Samsung and Apple. Samsung, meanwhile, remains the world's largest cell phone vendor and one of the only companies making any money from the devices.