The retailer, along with Littlewoods' subsidiary Index and Hasbro toys, was found guilty by the Competition Appeal Tribunal for keeping prices of toys and games artificially high during 2000 and 2001.
Shortly before Christmas, Argos and Littlewoods vowed to fight the decision. However, the retailers had their fines reduced, by£2.3 million for Argos and from£5.37 million to£4.5 million for Littlewoods.
The Office of Fair Trading, the body that brought the case against the retailers welcomed today's ruling.
OFT chairman Sir John Vickers said: 'Today's ruling confirms the gravity of price fixing and that serious penalties providing deterrence are right and fair.'
Argos said it was disappointed with the decision, but maintained its innocence and vowed to appeal again.
It said: 'The toy market in the UK is very price competitive and Argos, as the number one player in the market, prides itself on the great value of its offer. Argos is committed to providing choice, value and convenience across all its ranges and for all customers.'
A spokesman for Littlewoods sister catalogue chain Index noted the reduction of the fine. He said. 'However, the company does not believe that it has infringed UK competition law and continues to be disappointed that the CAT did not allow the appeal in full. Index and its advisors will now carefully study the judgements made by the CAT in this case and will explore all options available.'