A DISTRIBUTOR HAVING A LARGE INFRASTRUCTURE , FOR WATTS AFTER HIS FIRST INVENTIONS , EXPLAIN HOW THEIR RELATIONS CAME INTO BEING AND THEN DEVELOPED WITHOUT THE TWO PARTIES ' HAVING THOUGHT IT NECESSARY TO SET THEM DOWN IN WRITING .
40THERE ARE GROUNDS FOR ACCEPTING THAT AS FAR BACK AS 1956 THE WATTS AND THEAL UNDERTAKINGS WERE BOUND BY TWO ORAL AGREEMENTS , ONE APPOINTING THEAL AS THE SOLE DISTRIBUTOR OF WATTS ' S PRODUCTS IN THE NETHERLANDS WHEREBY WATTS UNDERTOOK TO SUPPLY THEAL EXCLUSIVELY IN THE NETHERLANDS AND TO PASS ON TO IT ALL ORDERS RECEIVED BY WATTS FOR THE NETHERLANDS , THE OTHER CONSISTING OF THE GRANT OF THE EXCLUSIVE RIGHT TO USE IN THE NETHERLANDS THE TRADE-MARKS AFFIXED TO THESE PRODUCTS .
41THESE ORAL AGREEMENTS MUTUALLY BINDING TWO UNDERTAKINGS WERE AGREEMENT WITHIN THE MEANING OF ARTICLE 85 ( 1 ) THE CONSEQUENCE OF WHICH WAS TO GIVE THEAL ABSOLUTE TERRITORIAL PROTECTION IN THE NETHERLANDS .
42FURTHERMORE THIS PROTECTION WAS ENSURED IN 1956 BY THE APPLICABLE NATIONAL LAW AND STRENGTHENED LATER BY THE PROHIBITION ON EXPORTS IMPOSED BY WATTS ON WHOLESALERS IN THE UNITED KINGDOM AND BY THE AFFIXING OF A LABEL ' ' EEN THEAL-PRODUKT ' ' TO PRODUCTS SUPPLIED BY WATTS TO THEAL WHICH ENABLED THE LATTER TO ASCERTAIN WHETHER WATTS PRODUCTS WHICH DID NOT COME FROM ITS OWN UNDERTAKING WERE BEING OFFERED FOR SALE IN THE NETHERLANDS .
43THIS SYSTEM TAKEN AS A WHOLE PROVIDED THEAL WITH THE MEANS OF PREVENTING ALL PARALLEL IMPORTS FROM THE UNITED KINGDOM OR FROM ANY OTHER MEMBER STATE INTO THE NETHERLANDS AND THUS OF ELIMINATING ALL COMPETITION ; IT CONSEQUENTLY LEFT THEAL COMPLETELY FREE TO FIX IN THE NETHERLANDS PRICES FOR THESE PRODUCTS PROTECTED FROM ANY EFFECTIVE COMPETITION FROM PRODUCTS OF THE SAME BRAND .
44THE SKILFUL USE OF TRADE-MARK LAW HAS IN THIS WAY STRENGTHENED THE TERRITORIAL PROTECTION GIVEN BY THE EXCLUSIVE DISTRIBUTION AGREEMENT , THE EXISTENCE OF WHICH IS ADMITTED , THE COMBINED EFFECT OF THESE TWO TECHNIQUES SECURING ABSOLUTE AND PERMANENT PROTECTION .
45THE ORIGINAL AGREEMENT CANNOT THEREFORE BE EXAMINED WITHOUT TAKING INTO ACCOUNT THE CONCERTED PRACTICE WHICH ENSURED ITS EFFICACY .
46FOR AN AGREEMENT TO BE INCOMPATIBLE WITH THE COMMON MARKET AND PROHIBITED UNDER ARTICLE 85 IT MUST IN THE FIRST PLACE BE ONE ' ' WHICH MAY AFFECT TRADE BETWEEN MEMBER STATES ' ' .
47ALTHOUGH THE CASE-LAW OF THE COURT LAYS DOWN ( JUDGMENT OF 25 NOVEMBER 1971 IN CASE 22/71 , BEGUELIN IMPORT CO . AND OTHERS V S.A.G.L . IMPORT EXPORT AND OTHERS ( 1971 ) ECR AT P . 959 ) THAT THE FACT THAT ONE OF THE UNDERTAKINGS WHICH ARE PARTIES TO THE AGREEMENT IS SITUATE IN A NON-MEMBER COUNTRY DOES NOT PREVENT THE APPLICATION OF ARTICLE 85 SINCE THE AGREEMENT IS OPERATIVE ON THE TERRITORY OF THE COMMON MARKET , THE FACT MUST ALSO BE TAKEN INTO CONSIDERATION THAT SUCH AN AGREEMENT DOES NOT FALL WITHIN THE PROHIBITION CONTAINED IN ARTICLE 85 IF IT AFFECTS TRADE BETWEEN MEMBER