Prohibition against economic monopolies
February 25 2021 08:35 PM

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 price
Many 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 sufficiently
A 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 monopoly
Monopoly 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.”

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Islamic ruling on Al-Luqatah (lost and found)
Linguistically, ‘Al-Luqatah’ refers to anything that is found and picked up from the ground. Technically, as Imam Ibn Qudamah, a Muslim scholar, may Allah have mercy upon him, defined it as: ‘Property that the owner loses and a person finds and takes away (to preserve it in trust).’

Legal Validity
Muslim scholars vary about the ruling. The Hanafi and Shafi’i jurists maintain that it is better to pick up a lost property because a Muslim is duty-bound to preserve his Muslim brother’s property, as evidenced by the saying of the Prophet, sallallaahu ‘alaihi wa sallam (may Allah exalt his mention), when he was asked about Al-Luqatah: “Remember the description of its container and the string with which it is tied. Make a public announcement of it for one year. If nobody comes and claims it, then utilise the money but keep it as a trust with you. And if its owner comes back one day seeking it, then return it to him.” [Al-Bukhari and Muslim]
According to the Maliki and Hanbali jurists, it is a Makrooh (disliked) act to take away such property. This is also the opinion of Ibn ‘Umar and Ibn ‘Abbas, may Allah be pleased with them. They argued that by taking away such lost items, one is bound to use something that is deemed unlawful. They also argued that one may not be able to undertake his duty efficiently regarding it, in terms of advertising it, returning it to its lawful owner and preserving it.
Its Ruling in Terms of Liability
Al-Luqatah remains a trust with the person who finds it and keeps it, and he is deemed liable for it only if he abuses it. He is also deemed liable for it if he gives it to somebody else without the permission of a judge. If it is damaged while still in the finder’s possession, after publicly announcing that he has found it and asking people to refer its rightful owner to him, then he is not deemed liable for such damage because he volunteered to preserve it in trust. The Ahaadith (prophetic statements) on this issue are very clear. The Prophet, sallallaahu ‘alaihi wa sallam, said in the above-quoted Hadith: “...But keep it as a trust with you”.
Types of Al-Luqatah
1. If it is an animal, the finder should see if it is able to protect itself or not. If it is able to, then he is not allowed to take it away. When the Prophet, sallallaahu ‘alaihi wa sallam, was asked about the Islamic ruling concerning a lost camel, he replied: “It is none of your concern. Leave it, for it has its feet and a water-container (reservoir), and it will reach water and eat from the trees until its owner finds it.” [Al-Bukhari]
However, if the lost animal is not able to protect itself, such as a sheep, a sick camel or a horse with a broken leg, the finder is allowed to take it away. When the Prophet, sallallaahu ‘alaihi wa sallam, was asked about the ruling concerning a lost sheep, he replied: “Take it, for it is either for you, or for your brother (i.e., its owner), or for the wolf.” [Al-Bukhari]
2. As for lost property that is not an animal, such as money of an unknown owner, one should consider the following rulings:

The Ruling Concerning Trivial Fallen Items
For trivial items such as a loaf of bread, a whip, a date or anything that people generally do not claim when they lose, according to the predominant custom, the person who finds such an item is allowed to claim it as his own without publicly announcing it. He is also allowed to utilise it. Jabir bin ‘Abdullah, may Allah be pleased with him, who was one of the Prophet’s companions, said: “The Messenger of Allah, sallallaahu ‘alaihi wa sallam, allowed us to utilise (such trivial objects as) a rod, a whip and a rope if we found it.” [Al-Bukhari and Muslim]

Announcing Lost Property Publicly
a) If someone finds an object, he should acquaint himself with the features that distinguish it from all similar objects. This will allow him to identify the right owner if he comes to claim it and asks him about its distinguishing features.
b) If he knows its distinguishing features, he should advertise it in public places, markets and outside mosques, but not inside the mosques, as this is deemed a Makrooh act. He should then wait for a year.
How should the finder be compensated for announcing, publicising or maintenance expenditure?
Hanafi and Hanbali jurists maintain that the finder should incur such expenses. Imam Malik, may Allah have mercy upon him, maintained: “The owner is to be given two options: either to reclaim it from the person who has found it, by paying him back for what he has spent on it, or to give it to him in return for the expenses incurred.” Shafi’i jurists say that the judge takes the money from the public treasury of the Muslim state and gives it to the finder of the lost property to use it for advertising purposes, or the finder may borrow this money and would consider it as a loan to the owner.

Returning Lost Property to the Person Who Claims It
If someone comes and claims that the lost property is his, its finder should ask him about its distinguishing characteristics. If the claimant adequately describes it and distinguishes it from similar items, or if he proves to him with clear evidence that it belongs to him - by describing its container or the string with which it is tied, for instance - then the finder should return it to him, as the Prophet, sallallaahu ‘alaihi wa sallam, said by way of example: “If its owner shows up and satisfactorily describes its container, the string with which it is tied and the amount of money in it, then return it to him.” [Muslim]
A question arises here: After the claimant provides a satisfactory description of the lost property, should the finder return the property to him or should he take him to a judge to establish the evidence and act upon the judge’s decision? According to the Hanafi and Shafi’i schools of Fiqh (jurisprudence), the finder of the lost property is not obliged to return it. The followers of the Maliki and Hanbali schools of Fiqh have stated that he is obliged to return it to its owner if the latter gives a satisfactory description of it, in accordance with the dictates of the prophetic tradition mentioned above.

Claiming Lost Property as One’s Own
The finder of the lost property can claim such property as his own if he still has it, or he can claim its price as his own in case he sold it after advertising it for the required period of time. In such a case, he should give it or give its value to the owner should the latter come forward to claim it, as the Prophet, sallallaahu ‘alaihi wa sallam, said in this regard: “Advertise it for a year. If nobody claims it, then utilise it, and keep it with you as a trust.” One is not allowed to claim it as his own without advertising it for a full year.
Some scholars argue that it is not permissible to consider lost property as one’s own, and whoever finds it should, after advertising, give it in charity to the poor because it is considered other people’s property, and it is not permissible to use it without its owner’s consent, in accordance with prophetic textual evidence: the Prophet, sallallaahu ‘alaihi wa sallam, said: “A Muslim’s property is not lawful (for another Muslim) without the former’s own free will.” He, sallallaahu ‘alaihi wa sallam, also said: “Lost property is not lawful. Whoever finds it should advertise it for a year. If its owner shows up and claims it, he (the finder) must return it to him; if he does not show up, he should give it in charity.” [Al-Bazzar and Ad-Daraqutni]

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Giving gifts in Islam
Gift-giving is one of the good manners that maintains and strengthens relations between the giver and the recipient. It is one of the acts that Prophet Muhammad, sallallaahu ‘alaihi wa sallam (may Allah exalt his mention), recommended Muslims to do. Al-Bukhari, may Allah have mercy upon him, narrated that ‘Aa’ishah, may Allah be pleased with her, said: “The Messenger of Allah, sallallaahu ‘alaihi wa sallam, used to accept gifts and reward people for giving them.” 
The phrase: “Reward people for giving them,” means giving the giver (at a later time) something of equal value at least in return.
This Hadith (narration) indicates that accepting gifts and giving something of equal value (or more) to the giver is the way of the Prophet, sallallaahu ‘alaihi wa sallam. 
The Prophet, sallallaahu ‘alaihi wa sallam, enjoined responding in kind to favours, as he said in an authentic narration: “Whoever does you a favour, respond in kind, and if you cannot find the means of doing so, then keep praying for him until you think that you have responded in kind.” [Abu Dawood]
“Whoever does you a favour,” means, whoever treats you kindly in word or deed or by gifting you. 
“Respond in kind,” means to treat him kindly just as he has treated you kindly. 
“If you cannot find the means of doing so” means if you do not have the money. 
“Until you think that you have responded in kind” means, repeatedly supplicate for him until you think that you have rewarded him his due. 
One of the Du’aa’ forms that one can say is ‘Jazaka Allahu khayran’ (may Allah reward you with good). At-Tirmithi, may Allah have mercy upon him, narrated that Usamah Ibn Zayd, may Allah be pleased with him, said: The Messenger of Allah, sallallaahu ‘alaihi wa sallam, said: “Whoever has a favour done for him and says ‘Jazak Allahu khayran’ has done his utmost to thank him.” [At-Tirmithi]
“Done his utmost to thank him,” means that he has done his utmost to express his gratitude, because he has acknowledged his shortcomings and that he is unable to reward and thank him enough, so he refers the matter to Allah, to reward him in the best manner. It is said that: “If you are unable to give him back in kind, then speak at length thanking him and supplicating for him.” [Tuhfat Al-Ahwathi]
The Permanent Committee (a supreme Islamic judicial authority in Saudi Arabia, was asked a similar question) and replied as follows: 
“There is nothing wrong with accepting it (an amount of money as a gift), without you (the recipient) longing for that, and you can respond in kind if you are able to with an appropriate gift, or you can supplicate for him, because the Prophet, sallallaahu ‘alaihi wa sallam, said: “Whoever does you a favour, respond in kind … (the above-mentioned Hadith).”  [Fatawa Al-Lajnah Al-Daa’imah] 

Difference between charity and gift-giving
Charity is given to the poor and the needy to meet their needs, and is done with the intention of seeking the Pleasure of Allah. Its intention is not limited to a specific person; rather it is given to any poor or needy one. 
On the other hand, a gift is not necessarily given to a poor person, rather it may be given to rich or poor; the intention is to show friendship and to honour the recipient. 
Both of them – charity and gift-giving – are righteous deeds for which a person will be rewarded (and please his Lord), but which is better? 
Ibn Taymiyah, may Allah have mercy upon him, stated that Sadaqah (charity) is that which is given for the sake of Allah as an act of worship, without intending to give it to a specific person and without seeking anything in return, rather it is given for charitable causes, such as to the needy. A gift is given with the intention of honouring a specific person, either because the recipient is your friend whom you love, or because you want something in return.
Hence, the Prophet, sallallaahu ‘alaihi wa sallam, used to accept gifts and reward people for them, so that no one could remind him of their favours, but he did not accept the “refuse” of people that they gave to purify themselves of sins, namely charity. He did not accept charity for this and other reasons.
Once this is understood, then charity is better, but there is a sense in which a gift is better than charity, such as giving a gift to the Messenger of Allah, sallallaahu ‘alaihi wa sallam, during his lifetime out of love for him.  Also, gifts which a person gives to a relative in order to uphold the ties of kinship or to a brother in Islam may be better than charity. 
Based on this, giving to one of your relatives may be better than giving charity, because it is more befitting to uphold the ties of kinship. The same may apply if you give a gift to a friend of yours, because that will strengthen the bonds of love between you. The Prophet, sallallaahu ‘alaihi wa sallam, said: “Exchange gifts, as that will lead to increasing your love to one another.” [Al-Bukhari]
What the Hadith  means is that giving gifts may generate and increase love.
To sum up, gifting vs. giving charity is dependent on the situation but, in principle, spending in charity takes precedence.

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