Grundig GmbH contracted to distribute its electronic goods in France, and appointed Consten SaRL as its exclusive distributor.

The Commission viewed Consten's and Grundig's action against UNEF as an unlawful breach of Article 85 of the Treaty of Rome (now Art 101 of the TFEU), as it was important to ensure that competing parallel imports from one state to another were unhindered.

The case was referred for a Preliminary Ruling to the European Court of Justice under Article 177.

It rejected the argument that allowing exclusive distributorships protected a distributor's legitimate interest, by hypothetically preventing competitors (once the costs for initial market penetration had been spent) from free riding on the investment of advertising and marketing initially by the distributor, and then undercutting prices.

[...] An agreement between producer and distributor which might tend to restore the national divisions in trade between Member States might be such as to frustrate the most fundamental objectives of the Community.