Williams left the field with fake blood pouring from his mouth against Leinster
Ex-Harlequins director of rugby Dean Richards has been banned from coaching in European competition for three years for his role in the fake blood injury.
Tom Williams faked injury to allow fly-half Nick Evans to return to the field in a Heineken Cup tie against Leinster.
Winger Williams's initial 12-month ban has now been reduced to four months.
Quins' fine was increased to £259,000 but European Rugby Cup (ERC) stopped short of the ultimate sanction of throwing them out of this year's Cup.
The original fine of 250,000 euros (£206,000) had been half suspended, but the new amount is payable in full.
However, Harlequins will be relieved not to have been thrown out of this season's Heineken Cup, which might have cost them 15% of their annual revenue.
Physiotherapist Steph Brennan was handed a two-year ban after an admission of guilt, but the appeal committee dismissed the charge against Dr Wendy Chapman from the club's medical staff.
Former England forward Richards, who resigned from his position as director of rugby at Quins last weekend, was also found to have been involved in four similar incidents, hence the severity of his punishment.
Reacting to his ban, Richards said: "I'm surprised. Three years is a long time but I'll reflect on it overnight.
"I took full responsibility for it. It was a farcical situation, it really was.
"It didn't pan out particularly well on the day. Everybody looked at it and thought, 'That's unreal', which is what I thought on the touchline as well.
"But I had to hold my hands up."
The cover-up is thought to have involved Williams' face being deliberately cut after the Leinster match to hide the fact he had used a fake blood capsule.
Richards said: "I have no knowledge of that. I wasn't party to anything going on there.
I took full responsibility for it. It was a farcical situation, it really was
"I'm not aware that it did happen. I know that he had a cut but I don't know how it came about because I wasn't in the room."
Richards had not decided whether to appeal the decision to the Court of Arbitration for Sport.
He said: "I'm a little bit shocked, a little bit surprised by it all.
"It seems a little bit disproportionate but, at the end of the day, I'll reflect on it overnight and obviously see where my thoughts are in the morning."
Reading a statement, Williams said: "I sincerely regret the role that I've played in this unacceptable incident that has done so much damage to the image of rugby union.
"I let down my team-mates and the club's fans, and I'll have to live with those actions for the rest of my career.
"In deciding to come clean and do the right thing, I've tried honestly to rectify this mess and repay the good faith shown in me by my friends and family.
"I would like to thank the ERC disciplinary panel for their decision to reduce my sanction and I am relieved that they did this.
Richards resigned earlier this month after four seasons with Quins
"However, I also realise the grave error of judgment that I have made."
He added: "I hope that, as a result of this episode, no player or employee will ever be put in such a compromised position, and if they are then they will always tell the truth, as I had wished I had done from the outset."
The Professional Rugby Players' Association welcomed the decision to reduce the ban handed down to Williams.
"We are grateful to the ERC disciplinary panel that Tom's ban has been reduced on appeal, but the aftermath of this episode has left an indelible stigma on the professional game," said PRA chief executive Damian Hopley.
"Tom is a fine young man of good character, even though he is guilty of a serious error of judgement, albeit under instruction from his employer.
"He has been under tremendous pressure since the original incident in April, but his determination to tell the truth and attempt to undo the damage done to himself, his family and the image of the game speaks volumes for the enormous remorse he feels."
The sanction on Richards applies to ERC-organised tournaments, though the ERC will request it is extended to become a worldwide ban.
The decision, which cannot be appealed against, was made by an independent ERC disciplinary committee in Glasgow late on Monday.
A statement on the club's website said: "Whilst the club are pleased that Tom Williams' ban has been reduced, we feel this is a very significant penalty in terms of fine.
I also realise the grave error of judgment that I have made
"We will now continue with our internal review into all aspects of the business to ensure that we have the most stringent compliance and robust policies and processes in place throughout the club and work towards rebuilding our reputation on and off the field.
"We hope that the club can now draw a line under what has been a difficult few months, learn from it and move on."
Evans had departed injured in the 47th minute of the 6-5 defeat by Leinster before his replacement at number 10, Chris Malone, also went off injured later in the second half.
With time running out, Williams was seen with what appeared to be blood coming out of his mouth, which meant he could go off to be replaced by specialist kicker Evans.
Evans missed a drop goal as the Irish side held out for the win before going on to win the Heineken Cup.
Television pictures appeared to show Williams winking at the bench as he went off.
Leinster were incensed and their club doctor, Professor Arthur Tanner, followed Williams down the tunnel but was prevented from entering the treatment room.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.