Cutting prices to drive competitors out of the market

A question from a sales company about cutting its prices for two months to push its competitors out of the market, in which Jordan's General Iftaa Department answered that the ruling depends on the intention. ¹

A sales company said it could break all its competitors by lowering its prices for two months so that they would leave the market, and asked whether this is permitted. ¹

The Department answered that selling below the market price with the aim of harming other traders, such as inflicting losses on them or driving them out to monopolise the market, is forbidden, citing the hadith that there is to be no harm and no reciprocal harm. ¹ It said that a price cut made without intent to harm, which causes only slight harm, is tolerated for the public benefit of easing costs for people, such as clearing goods near the end of their season or shelf life, as a temporary measure for a limited time. ¹ Where it causes gross harm to the market as a whole, it set out two views: the majority hold that a trader may sell at any price and is not bound to a fixed one, citing the report of Umar and Hatib ibn Abi Balta'a; the Malikis hold that he must match the market price or leave the market, quoting Ibn Rushd's al-Bayan wa-l-Tahsil. It urged traders to take this into account. ¹

Jordan's General Iftaa Department published this fatwa on aliftaa.jo as no. 3802, dated 14 September 2023. ¹ The museum records this text as a historical document attributed to the body or scholar that issued it; it issues no ruling of its own.