(Adds detail of judgment, company reaction)
By Douglas Bakshian and David Milliken
LUXEMBOURG/BRUSSELS, Sept 18 (Reuters) - The European Union's top court upheld a 90 million euro ($101.6 million) fine against Volkswagen on Thursday, punishing the continent's biggest car manufacturer for unfair sales practices.
The European Court of Justice dismissed Volkswagen's appeal of a 1998 fine and ordered each side to pay costs.
A Volkswagen spokesman said the ruling would not affect the group's profits, as it had already made provisions in its accounts.
"The conditions for selling cars have changed considerably thanks to the introduction of the euro and the block exemption," he said in a reference to new European Commission rules governing car sales.
The European Commission had originally fined Volkswagen 102 million euros for restricting Italian distributors from selling its cars to German and Austrian customers during the mid-1990s.
At the time, the fine was then the largest levied on a single company.
The EU's Court of First Instance reduced the fine to 90 million euros in 2000. Since then Volkswagen's fine has been dwarfed by penalties applied in other cases -- in 2001, a group of vitamin manufacturers were fined 855 million euros.
The European Court of Justice said that between 1993 and 1996 Volkswagen had made life difficult for Germans and Austrians who wanted to cross the Alps and take advantage of lower Italian car prices.
"To restrict these parallel imports from Italy, Volkswagen and others limited the supply of Italian dealers and introduced a bonus system that Italian dealers with sales to non-Italian customers were kept out of," the court said in a statement after the ruling.
The European Union's executive, in charge of policing internal market issues, had earlier ruled that this breached EU rules designed to ensure free trade of goods and services between member states.
New European Commission rules loosening the grip of car makers on dealers began to take effect nearly a year ago. Many of the rules become final on October 1 and some will take effect next year. (Additional reporting by Jan Schwartz in Hamburg