◦ 1957 Grundig entered into contract with Consten, French undertaking meant to be sole representative of Grundig in France for sale of radios, TV, etc. This was vertical agreement.
◦ UNEF bought Grundig appliances from German traders and sold them in france despite export prohibition.
◦ Consten brought two actions against UNEF, one for unfair competition and one for infringement of GINT mark.
◦ Commission had a look at whether the agreement was against Art 101(1). Commission said that A, contract in question and accessory agreement on registration and use of the GINT mark was infringement of provison of Art 101. B, refused to grant declaration of inapplicability provided for in Art 101(3). And C, Grundig and Consten were 'required to refrain from any measure tending to obstruct or impede the acquisition by TP, at their wish, from wholesalers or retailers est in the European Economic Community of the products set out in the contract, with view to resale the contract territory.
◦ Grundig and Consten brought action before ECJ to annul decision of E Commission. Argued
▪ 1. Art 101(1) not applicable to vertical agreements
▪ 2. restrictions in contract did not restrict competition.
▪ 3. agreement did not affect inter-state trade.
• ECJ rejected first argument, said there was no distinction between vertical and others. ECJ said that such agreements between producers and distributors might tend to restore national divisions in trade which was contrary to the basic objects of the EU. On point three, ECH said that by reserving market for Grundig products to Consten, agreement affected trade between MS, even if increased level of trade.