South Korea's antitrust authority fined Google 207 billion won (S$237 million) for prohibiting customized versions of its Android operating system (OS), the company's second setback in less than a month.

The Korea Fair Trade Commission (KFTC) said arrangements with device makers amounted to abusing Google's dominating market position, limiting competition in the mobile OS industry, on Tuesday (September 14).

In a statement, Google stated that it expects to appeal. It claims that the judgment ignores the benefits of Android's compatibility with other programs and harms consumer benefits.

The penalty was imposed on the same day that an amendment to South Korea's Telecommunications Business Act, dubbed the "anti-Google law," took effect.

The rule currently prohibits app store owners like Google from forcing software developers to utilize their payment systems, thus prohibiting developers from earning commission on in-app transactions.

According to the KFTC, Google impeded competition by requiring device manufacturers to sign an "anti-fragmentation agreement (AFA)" when signing important contracts with them for app store licenses. Manufacturers could not use "Android forks" or modified versions of Android on their phones under the AFA.

According to the KFTC, this has aided Google's market domination in the mobile OS market. The penalties might be the ninth-largest the authority has ever imposed, according to the regulator.

Samsung Electronics released a smartwatch with a customized OS in 2013 but then moved to a different OS because Google deemed the move to be an AFA infringement, according to the KFTC. Samsung Electronics did not respond to a request for comment.