SEOUL (AFP) - South Korea's biggest Internet portal Naver was hit with an unprecedented 26.7 billion won (S$31 million) fine Tuesday (Oct 6) for manipulating search results in favour of its own online shopping service.

Naver is an equivalent to Google in South Korea, with an omnipresent status in everyday lives through services including its search engine, news portal, online shopping and blogs.

It is the third-largest company quoted on Seoul's main stock exchange, with a market capitalisation of 50 trillion won - just behind memory chip giants Samsung Electronics and SK Hynix.

The Korea Fair Trade Commission, the country's antitrust regulator, ruled Naver altered algorithms on multiple occasions between 2012 and 2015 to raise its own items' rankings above those of competitors.

The operator introduced a system that "guaranteed a certain percentage" of the top search results would be from its own online shopping service, the KFTC said in a statement.

The behaviour amounted to "distortion of market competition... deceiving customers who believed they had received fair search results", it added.

It is the first time Seoul has punished a search operator for making algorithmic changes for its own benefit.

Naver dominates the search market in South Korean online shopping with a share of more than 70 per cent.

It rejected the ruling and vowed to appeal.

"The core value of search service is presenting an outcome that matches the intentions of users," it said in a statement, adding: "Naver has been chosen by many users thanks to our focus on this essential task.

"We do not accept the decision and will dispute it in court."