UNFAIR COMPETITION

QUESTION:

A member of my congregation who is involved in litigation between the operator of a television station and a new applicant for a television license, who hopes to replace the present operator, has asked this question: Would Jewish law protect the operator of a business, trade or profession, who is doing generally satisfactory work, against encroachment by a competitor who seeks to replace him? (Asked by Rabbi Joshua O. Haberman, Washington, D.C.)

ANSWER:

THERE IS A vast amount of Talmudic and post-Talmudic law on the question involved here, namely, when is the encroachment by a competitor unfair and against Jewish law?

The chief source of the law on this subject is in the Talmud (Bava Batra 21b ff.) and there the discussion involves two opposing opinions, one by R. Huna and the other given anonymously. R. Huna says that if a man wants to establish a store near another store in the same business, the established storekeeper can prevent him from doing so on the ground that the second one will be destroying his livelihood. But an opposing opinion says that he cannot prevent him because the second man can say: You do your business in your establishment and I will do business in mine. (In other words, let there be free trade.) Then the law develops on the basis of this disagreement as follows: Strangers from another city may be prevented from offering competition but not residents of the same city. However, if the strangers accept the local burden of taxation, they may not be prevented from opening a rival business. A further development is mentioned by Asher ben Yechiel to this passage (Kitsur Piskke Harosh, Chap. II, #12) namely, that while citizens may prevent outof-towners from competing with the local merchants, their right to prevent such competition becomes void if the out-of-towners are selling better goods or the same goods at a cheaper price. In other words, he says, the Rabbinical law considers not only the storekeeper, but also the consumer. The Tur (the son of the Rosh) describes the law as follows: In the same courtyard (we might say in the same city block) the residents may prevent a store set up in rivalry to another store. Out-ofoowners can be prevented anywhere in the city unless they pay the city tax. Then they can no longer be prevented in the city, but they still can be prevented “in the same courtyard” (i.e., in the same block) where another such store exists. The Talmudic law as it stands is therefore rather on the side of free enterprise than on the side of special presumptive rights. The majority of the scholars decide in favor of the permissive opinion given in the Talmud. So the Shulchan Aruch (Choshen Mishpat 156:5) says that one cannot prevent a rival since they both can share the business. Isserles here refers to the fact that Caro in his Bet Joseph to the Tur has a long and detailed comment on this question amounting to a small booklet. See also the similar decision (permitting competition) by Maimonides in Yad. Hil. “Shechenim,” Chapter VI: 8.

However, this liberal tendency of the Talmudic law permitting competition was greatly changed by special decree in the Middle Ages. In the Middle Ages the Jews lived under highly restricted circumstances and they were forced to protect their precarious livelihood. So the strict side of the Talmudic debate (R. Huna) became the rule; and no Jewish merchant from another town could come and do business in the ghetto. The scholars recognized that this restriction was contrary to the tendency of Talmudic law, but since it was necessary in order to save the precarious livelihood of the ghetto, they enforced their decision simply by keeping other merchants out of the city. No stranger to the city could rent a house in the ghetto away from a Jew who already had rented it (chezkat habatim).

There is a full discussion of the medieval methods of self-protection in the Mordecai to Baba Batra, Chapter II, paragraph 515, Mordecai speaks of how the law of free competition could be circumvented. He says that the local citizens themselves may pass a decree promising not to deal with strangers. Then if there is a rabbi in the town (and the strangers are his disciples who have to obey his decree) he may make a decree against a stranger coming in to compete with the local people. Thus, also, they prohibited by decree the right of any Jewish competitor to compete with another Jew if he has a private arrangement with a Gentile as to loans or contracts. This private arrangement is known as maarufiah or in Eastern Europe Orenda. (From renteur?) In these various ways ghetto Jewry prevented competition, although in general the Talmudic law itself hardly prevented it.

Now the question is: To what extent is this complex legal situation applicable to the modern circumstances mentioned in the question? From a general point of view, it would seem to have no bearing on it because our economy is not as restricted as was the medieval economy, and certainly there are no special limitations against Jews which would necessitate the stern protective measures they developed in the Middle Ages. Furthermore, the Talmudic law says that a competitor cannot be prevented if he brings in better goods or the same goods at a cheaper price. If this rival station would increase and improve the broadcasting services to the community, it certainly should not be prevented.

However, in some ways the situation is much like the medieval maarufiah. Running a television station is, from the legal point of view, not quite the same thing as running a neighborhood store. To be permitted to run a television station requires special license and the license is not easy to come by. Therefore, it is much like those special relationships which by medieval Jewish law may not be infringed upon, especially if this proposed second station would put the first station out of business as the questioner suggests (a competitor who seeks to replace him). We are dealing here with a limited field in which there is not room to fulfill the permissive suggestion in the Talmud, “You do your business and I do mine.”

You can see from the above that it is difficult under these modern circumstances to base a decision upon Jewish law when the law itself, owing to changing conditions, moved from a free trade to a restrictive mood under the necessities of medieval life. The answer depends on how we are to evaluate the special conditions of television broadcasting. If it is an open field with room for many to enter and the more that enter it, the better will be the service to the public, then the Talmudic spirit of free trade should prevail. If it is a limited field which in this special environment cannot support rival companies, and one must go to the wall, then the spirit of the medieval law should prevail and one Jew has not the right to destroy the livelihood of another.