"No, gray markets go AROUND regulations by cutting out the middlemen like customs."
Actually they can't treat customs as middlemen. You buy something from eBay from an overseas vendor customs may open it, apply duty forward it by an agent who collects the duty (assuming it was a legitimate item) and then charges you for the duty and their services. I've had it happen.
Roll this forward. Regulation comes into play.
Customs peruse eBay/Amazon/whoever for stuff that looks as if it might not comply and make a few trial purchases. If it's a vendor with a UK address, even if the stuff is posted direct from China the UK vendor gets prosecuted. For the rest eBay/Amazon/whoever get an offer they can't refuse and simply stop advertising the stuff.
Regulation enables enforcement. Enforcement might never be 100% but between direct enforcement and deterrence it can provide a good enough control.