Answered by Shaykh Faraz Rabbani
Recently I was told that undercutting the competition (i.e. beating the price offered by a competitor) is not allowed in Islam. To give an example, if a customer comes to me with a price of $29 from my competitor, I then offer him the same product at $25. Is this haraam?
Answer:
Walaikum assalam,
Abu Hurayra (Allah be pleased with him) reports from the Prophet (Allah bless him and give him peace) that he said, “Do not bid over your brother’s bid.” [Muslim and others]
Imam Haskafi explained this in al-Durr al-Mukhtar as relating to both Muslims and non-Muslim, but its prohibitions refers only to the case when one bids after the two parties have reached an agreement on the price. Otherwise, it is not disliked to out-bid, and it has been established that the Prophet (Allah bless him and give him peace) himself did the latter. [As related by Tirmidhi, Abu Dawud, Nasa’i and Ibn Maja]
Ibn Abidin said in his supercommentary (Radd al-Muhtar) that the wisdom behind the Prophetic prohibition is that such bidding causes ill-feeling and harm, especially between those who have brotherly relations. [Haskafi/Ibn Abidin, Radd al-Muhtar `ala al-Durr al-Mukhtar, 4.132, Bulaq ed.]
The ruling is essentially the same in the other schools. [Shafi`i: Nawawi/Shirbini, Mughni al-Muhtaj Sharh al-Minhaj (2.391); Buhuti, Kashshaf al-Qina` (3.183)]
Shah Wali Allah al-Dahlawi (Allah have mercy on him), known as ‘the Ghazali of the Indian Subcontinent’ for combining absolute mastery of the outward and inward sciences and explaining the secrets of the Shariah, explained:
“The Prohibition of Selling Over Another’s Sale
As for selling over another’s sale, [the prohibition] is because it constricts one’s fellow traders, and entails poor dealings with them because the right of the first seller had preponderated and his provision seemed eminent. Therefore, to negate it [by intervening and out-selling him after everything has been effectively agreed upon] and elbowing him in it is a form of wrongdoing (dhulm).
Bidding over one’s brother’s bid is similar in constricting and ill-dealing with other buyers, and it leads to many arguments and rancor.” [Dahlawi, Hujjat Allah al-Baligha, 2.294]
And Allah alone gives success.
Wassalam,
Faraz Rabbani
