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Performance deteriorates when a target is flanked by contextual elements. For example, vernier thresholds increase when the vernier is flanked by lines. But when the lines are made part of a “good Gestalt”, like a rectangle, deterioration is reduced. Our explanation is that target and flankers do no fall in the same perceptual group. Here, we presented verniers flanked on each side by eight vertical irregularly arranged lines. The lines appeared strongly cluttered and thresholds were more than 10 times the unflanked thresholds. However, the deleterious effect almost ceased when the cluttered lines were surrounded by rectangles. We suggest that the rectangles reduced interference because they grouped the flankers into two different objects. The vernier stands out from the objects. Our results support the proposition that good Gestalt determines contextual modulation.