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Consten and Grundig v. Commission

English Special Edition 1966 00299, 1966 E.C.R. 299 (1966)

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Consten and Grundig v. Commission

European Union Court of Justice

English Special Edition 1966 00299, 1966 E.C.R. 299 (1966)

Facts

Grundig (plaintiff) was a German company that decided to start marketing some of its products in France. Grundig contracted with a wholesaler called Consten (plaintiff) to sell Grundig’s products in France. The agreement included an exclusivity term providing that Grundig would not sell to other French distributors and would prohibit Grundig’s other wholesalers from exporting Grundig’s products to France. Unaffiliated, parallel importers began buying Grundig’s products in Germany, importing them to France, and selling them to French customers at lower prices than Consten. Consten and Grundig sued the parallel importers in a French court, which adjourned proceedings while Consten and Grundig informed the European Commission (commission) (defendant) about their distributor agreement. Consten and Grundig argued to the commission that the exclusivity provisions were necessary to permit Consten to conduct advance planning for its sales strategy. They also argued that Grundig’s reputation would be harmed if parallel importers did not offer sufficient after-sale services for Grundig’s products. The commission rejected these arguments and adopted a decision finding that the exclusive territory agreement and export bans violated Article 101 of the Treaty on the Functioning of the European Union (TFEU). Consten and Grundig appealed.

Rule of Law

Issue

Holding and Reasoning

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