Tricky question :D!
It is LEGAL but is it ETHICAL?? that is open to debate.
From the point of view of business people who are in the grey market arena, this is perfectly legal. They buy low and sell high but lower than the competition. For the authorized distributor this is illegal as it infringe on their contract with the mother company who produced the product. As for the consumers, this is a win-win situation because name brand products are available to them at a fraction of the price compared to what they have to pay if they buy from authorized resellers.
My take....it is legal (so long as taxes and all dues are paid the government), as this helps control large corporations penchant for monopolizing the market and driving up the price of products for the sake of profits. :D
For consumers, competition between companies is a good thing as it helps keep the prices at a fair level.
As for it being ethical....no comment :D!