Prohibition against economic monopolies

Monopoly, or Ihtikar in Arabic, is a prohibited practice in Islam because it leads to injustice. The Prophet Muhammad, sallallaahu ‘alaihi wa sallam (may Allah exalt his mention), has made explicit and specific statements about it. For example, he said: "Whoever withholds food (in order to raise its price), has certainly erred!” [Muslim] Also: "Whoever strives to increase the cost (of products) for Muslims, Allah, the Exalted, will seat him in the centre of the Fire on the Day of Resurrection.” [Ahmad and al-Hakim]Mu’aath, may Allah be pleased with him, said that he heard the Messenger of Allah, sallallaahu ‘alaihi wa sallam, saying: "What an evil person is the one who withholds! If Allah causes the prices to drop, he would be saddened, and if He causes them to climb, he would be excited.” [Al-Bayhaqi] There are also Hadiths that prohibit buying goods from trade caravans before reaching the city, and traditions that prohibit selling goods to persons unfamiliar with the market. These are types of monopolistic practices that have known negative effects upon the economic infrastructure.As to buying goods from trade caravan merchants (who are unaware of current prices in the market), this is most analogous to what is known today as a "special monopolistic pact,” under which consumers, typically, are harmed most.As for selling goods to persons unfamiliar with the market, this works to create special markets in which the seller or supplier utilises the consumer’s lack of knowledge of the market and prices to his own end. Ibn Hajar al-Haythami, may Allah have mercy upon him, said: "It is said the reason this type of transaction is prohibited (i.e., buying goods from trade caravans) is the concern that the buyer will withhold the goods he purchases from others, and thereafter treat them unfairly and make it difficult for them.”The jurists are at variance as to what a monopoly includes. Is it specific to foods, or does it include everything?The majority opinion, which is also most in line with the aims (maqasid) of the Shari’ah, is that the prohibited monopoly is one that inflicts harm on people and makes it difficult for them with the monopolist’s intention to sell when prices soar, and at the highest possible price. Whoever does this would be considered a monopolist, and his deed is unlawful.Imam Malik, may Allah have mercy upon him, said: "Monopoly occurs in everything, including food products, jute, woolen or safflower products and the like; whatever, if withheld, would harm people, the withholder should be prevented from so doing, but if he is not harming (consumers) or their commerce, there is nothing wrong with it.Imam Yahya an-Nawawi, may Allah have mercy upon him, said: "The wisdom behind prohibiting monopolistic practices is to prevent the harm that would befall people as a result. Scholars are in agreement that if a person possesses items that people are in dire need of, and they cannot find anyone else to supply it, he is to be forced to sell it in order to lessen the harm and remove difficulty from people.”Dr Robi has clarified the conditions of the prohibited monopoly. He said: "After reading through judicial economic writings, we can conclude that the conditions of the prohibited monopoly according to the jurists’ are as follows:Increasing the priceMany traditions underline that the aim of the one who withholds is to increase the price. This can be understood from an economic perspective, since it is not feasible for withholder to undergo loss in order to purchase and store the product while part of it perishes besides the fact that he used his capital to purchase the products to later on sell it at the same price! This individual increases the price when people are in need of the product.As for one who stores some products, to make them available at a time of need, and makes a small profit by increasing the prices, without harming the people; this person would indeed have brought about a good service to others.This is, therefore, a form of permitted monopoly. Thus increasing prices of goods is not harmful in itself. In fact, prices of a product usually fluctuate during normal times, and may change from day to day, and can increase to meet normal inflation that is typical for the particular community the trading takes place in.Monopolistic practice, on the other hand, manipulates a situation to intentionally increase prices suddenly and drastically.Decreasing supply sufficientlyA known method, by which prices are increased, is increasing demand for a product so that this demand exceeds its supply, or, conversely, decreasing supply at a rate greater than the decreasing demand. Naturally, in this case, it is not feasible for the one who withholds the product to increase the supply, unless he decreases its cost, and he defeats his purpose in so doing. In such a case, he would not be able to make a profit unless he reduces its supply partially or totally for a period of time. The jurists differentiated various cases:A. Controlling the supply of a product should not be confused with decreasing the supply. Controlling supply, which is lawful and occurs under normal circumstances, usually when products are readily available, is beneficial to both consumer and supplier, as is the case with agricultural goods.B. Keeping stock for use should not be confused with stock kept for retail. Considering the jurists’ definition of monopoly, we find that they restricted its meaning to buying products which are later withheld, with the intention of retailing them. Therefore, stocking products for personal use is lawful, for it does not disrupt the supply of the product or lead to price increases.C. Large markets should not be confused with less important markets. The reason monopolies are prohibited is due to the harm and dangers that arise from them. Therefore, if withholding a product in a large market would cause harm, it would be considered a prohibited monopoly.D. Importing goods should not be confused with withdrawing goods from the market. The majority of jurists agree that the importer of goods from distant markets is not a monopolist, as long as he does not cause harm. It is clear from the conditions of prohibited monopoly and textual proofs in the Shari’ah that monopolies of all sorts would fall under the same ruling, for the following reasons:1. The traditions that mention prohibition of monopoly are general, and no distinction is made therein between food products and animals.2. The prohibition of the Messenger of Allah, sallallaahu ‘alaihi wa sallam, regarding monopolies relating to foods is a ruling given to a common item which is monopolised. It does not mean that it is the only item that a monopoly is prohibited in, nor are the general traditions concerning this restricted by those traditions mentioning the prohibition of the Messenger, sallallaahu ‘alaihi wa sallam, in foods.3. The reason monopolies are prohibited is the harm that arises from them; whenever this reason is present in food monopolies or other monopolies they are to be prevented.4. Restricting monopolies to foods alone allows monopolies in items that aid in their produce, such as fertilisers, agricultural machinery, and animals. By right, monopolies in these items should also be disallowed because they lead to monopolies in foods. In addition, present day economic conditions are more complex, specialisations have broadened, work details have been divided, people are dependant upon others to fulfill many of their needs, and new products have been invented, which if not readily available cause disorder, and if monopolised cause harm.For this reason, Abu Yousef, the great Hanafi jurist, may Allah have mercy upon him, was of the opinion that monopolies of all sorts are prohibited, as long as they harm people. In the language of present-day economics it can be said that it is not lawful to play with supply of a necessary product which has no substitute.Examples of monopolyMonopoly cannot be restrictively and exhaustively defined due to its many types, but it is possible to cite some of the examples the jurists mentioned when they talked about monopoly.1. Monopolising the production of a product, whether individually or by a group, so as to control pricing, supply, and competitive production.2. Monopolising certain services and trades, such that a certain group has the arrogation of a monopole. Thus they can prevent others from providing that service or trade, or they will not provide their services, while the Ummah is in a dire need of them.Ibn Taymiyyah, may Allah have mercy upon him, said: "If people are in need of farmers, tailors, or construction services, this work is compulsory upon them if the ruler forces them to do so, after they refuse to accept reasonable charges in lieu of their services. It is not lawful for them to ask for more than that sum for their services.”He said: "Moreover, if people are accustomed [or, have restricted access] to foods and other products being sold only by certain people, in such a case it is a must that pricing be controlled, such that they can only sell at reasonable cost.”Ibnul Qayyim, may Allah have mercy upon him, said: "A horrid form of oppression is the renting out of shops on the sides of roads, or in villages, for a certain price and with the condition that no one sells a certain product except the one who rents out the shops. This oppression is prohibited upon the one who rents the shop out and upon the one who rents it....So too [is their prohibition] when people are habituated to foods or other products being sold only by certain people, and wholesalers sell only to them, and these wholesalers then sell the products in retail at their own prices, while anyone besides them who sells these products are punished and prevented from doing so. This indeed is oppression and corruption which has spread in the lands.”Some researchers have commented on this passage saying: "The matter which Ibn al-Qayyim is considering here is exclusive commercial or business representation, which is common in Islamic countries.”3. Agreed monopoly, wherein buyers or sellers agree to monopolise an industry. Ibnul Qayyim, may Allah have mercy upon him, said: "Many scholars, such as Abu Haneefah and his companions, have disallowed those who divide real estate and other things for a fee, to unite under a coalition [or cartel], for if they do so, and people are in need of their services, they will increase their rate.”Ibn Taymiyyah, may Allah have mercy upon him, said: "Also, buyers should be prevented from agreeing to purchase what one of them purchases until nothing is left in the market.”Ad-Dusooqi, the Maliki jurist, may Allah have mercy upon him, describes another form of price-fixing that occurs in auctions: "It is not lawful for a buyer to secretly agree with others not to raise the price of a product for him in an auction.”Article source: http://www.islamweb.net/emainpage/ The Prophet’s justice​​​​​​​Justice is a noble moral and a magnificent characteristic which is attractive to people, infuses hope in the hearts of the wronged, and the unjust pay utmost concern for it.By virtue of justice, matters return to their normal and right path; rights are returned to their owners, people are happy and life is rectified. Welfare is present as long as there is justice, if justice is absent people will be miserable.Justice is a moral of those who are great, a feature of those who are pious; it is the hope of the righteous and the way to success for the believers in this worldly life and in the Hereafter. Justice was constituent in the character of the prophets, the righteous, leaders, mentors, and above all, the seal of the Messengers, the master of humans, Muhammad, sallallaahu ‘alaihi wa sallam (may Allah exalt his mention), enjoyed the greatest share of it.Justice was an aspect of the great character of the Prophet, sallallaahu ‘alaihi wa sallam. He practised it before Allah, the Almighty, in his dealings with others, with his relatives and with others, his friends, antagonists and even his stubborn enemies. Allah ordered him to be just; Allah Says (what means): {O you who have believed, be persistently standing firm for Allah, witnesses in justice, and do not let the hatred of a people prevent you from being just. Be just; that is nearer to righteousness. And fear Allah; indeed, Allah is Acquainted with what you do} [Qur’an 5:8]Therefore, the Prophet, sallallaahu ‘alaihi wa sallam, obeyed the Orders of Allah in all his affairs, adopting justice with his Companions and enemies.He would never deny anyone justice, even with those who objected to him and showed an unfavorable attitude towards him. He would rather forgive them, as in this story. Abu Sa‘eed Al-Khudri, may Allah be pleased with him, said: "While he was in Yemen, ‘Ali, may Allah be pleased with him, sent a gold-nugget to the Prophet, sallallaahu ‘alaihi wa sallam, who consequently divided it among four persons: Al-Aqra ‘Ibn Haabis Al-Hanthali, ‘Uyaynah ibn Badr Al-Fazaari, ‘Alqamah ibn ‘Ulaathah Al-‘Aamiri (a man from Banu Kilaab), and Zaydul-Khayr At-Taa’i, who was a man from Banu Nabhaan, may Allah be pleased with him. Thereupon, the Quraysh got angry because the Prophet bestowed gifts on the chiefs of Najd and ignored them. The Prophet, sallallaahu ‘alaihi wa sallam, justified this action by saying that he favoured them to soften their hearts. Afterwards, a man with a thick beard, prominent cheekbones, hollow eyes, a domed forehead and a shaved head came to the Prophet telling him to fear Allah. Thereupon, the Prophet said: "Who then would obey Allah if I disobeyed Him? Does Allah the Almighty entrust me with your affairs on earth while you do not?” " [Al-Bukhari and Muslim]Such great character is clearly highlighted in a most beautiful manner when the Prophet, sallallaahu ‘alaihi wa sallam, asked a person to seek retaliation from himself. Abu Sa‘eed Al-Khudri, may Allah be pleased with him, narrated: "While the Prophet, sallallaahu ‘alaihi wa sallam, was dividing something among people, a man came and attached himself to him. The Prophet slapped him with a date stalk. The man went out and the Prophet called him to retaliate. However, he told the Prophet that he had forgiven him.” [An-Nasaa’i]Moreover the Prophet, sallallaahu ‘alaihi wa sallam, always showed justice and hated to be distinguished from his Companions. Instead he loved equality and endured difficulties from them. Ibn Mas‘ood, may Allah be pleased with him, narrated: "On the day of the battle of Badr, every three persons would ride on one camel in turns. The Prophet had to do so with his two companions: Abu Lubaabah and ‘Ali ibn Abi Taalib, may Allah be pleased with him. When it was the turn of the Prophet, sallallaahu ‘alaihi wa sallam, to walk, the two Companions offered to walk instead of him. However he refused and said that they were not stronger than him, and he was in need of Allah’s reward just as they were in need of it.” [Ahmad]Practising justice within the context of his family was not brought to a halt when the Prophet, sallallaahu ‘alaihi wa sallam, was occupied with directing the affairs of the state or being engaged in battles. He used to apportion among his wives, invoking Allah, The Almighty, not to blame him for his special love or affection paid to certain wives; as reported in a Hadith narrated by At-Tirmithi, but it was classified as weak.‘Aa’ishah, may Allah be pleased with her, the wife of the Prophet, sallallaahu ‘alaihi wa sallam, said: "If the Prophet wanted to set out on a journey, he would draw lots among his wives so that one of them would accompany him.” [Al-Bukhari and Muslim]Anas, may Allah be pleased with him, narrated: "A wife of the Prophet, sallallaahu ‘alaihi wa sallam, sent to him food in a bowl as a gift. However ‘Aa’ishah, may Allah be pleased with her, hit the bowl so the food fell out and the bowl broke. Therefore, the Prophet, sallallaahu ‘alaihi wa sallam, said: "The spilled food has to be compensated for by other [food], and the broken bowl has to be compensated by another.” [At-Tirmithi- Hasan and Al-Bukhari (with different wording)]In passing judgment among quarrelling persons, the Prophet, sallallaahu ‘alaihi wa sallam, was perfectly fair and never committed any injustice. Haraam ibn Muhayyisah, may Allah be pleased with him, narrated on the authority of his father that a female-camel belonged to Al-Baraa’ ibn ‘Aazib, may Allah be pleased with him, entered a garden belonging to a man and caused damage there. Thus, the Prophet, sallallaahu ‘alaihi wa sallam, judged that protection of property was the responsibility of its owners during the daytime and the owners of cattle had to keep them during night. This is according to a Hadith narrated by Ahmad.The Prophet, sallallaahu ‘alaihi wa sallam, did not approve suspension of the prescribed punishment set by Allah, The Almighty, to administer justice among people, even if the criminal was his relative or favorite. When a woman from Banu Makhzoom tribe committed theft, the Prophet, sallallaahu ‘alaihi wa sallam, rejected the intercession of Usaamah, may Allah be pleased with him, for her and said his famous words: "O people, what led to the destruction of the nations preceding you was their acquittal of the noble person if he committed theft and infliction of the punishment on the weak if he committed theft. By Allah, if Faatimah, the daughter of Muhammad, committed theft I would cut her hand off.” [Al-Bukhari and Muslim]Also the Prophet, sallallaahu ‘alaihi wa sallam, used to order his Companions to administer justice in all matters and to achieve balance. Addressing ‘Abdullaah ibn ‘Amr ibn Al-‘Aas, may Allah be pleased with him, the Prophet, sallallaahu ‘alaihi wa sallam, said: "O ‘Abdullaah ibn ‘Amr, I have been informed that you observe daily fasting and perform voluntary night prayers the whole night. Do not do so, for your body, your eyes and your wife have due rights upon you.” [Muslim]Through this noble character, the Prophet, sallallaahu ‘alaihi wa sallam, could draw people’s attention to him, stimulate their feelings towards his sublime principles and set a unique method for the best nation - the Muslims - who guide all humanity to observe justice and obliterate oppression and injustice.Article source: http://www.islamweb.net/emainpage/