One of the arurim (curses) of this week’s parashah is the curse of one who is masig gevul re’eihu (Devarim 27:17).
According to most commentaries, this refers to somebody who effectively steals his neighbor’s property by shifting the landmark between them. However, the Rambam writes (Teshuvah 273) that somebody who prevents somebody else from working in “included in masig gevul re’eihu.” Rav Moshe Feinstein (Iggos Moshe Choshen Mishpat 2, no. 40, sec. 2) also mentions that the “curse of the verse” applies to the Talmudic prohibition of hasagas gevul.
In any event, in everyday speech the expression hasagas gevul, which is taken from this week’s parashah, refers to the prohibition of depriving another of his income. We will dedicate this article to discussing the parameters of the prohibition, and their application in the context of the modern work situations.
The Nature of the Prohibition
The prohibition of being yored le-umanus chavero, literally “descending to another’s profession,” or, in more simple terms, illegal competition, is derived from two distinct verses. The Gemara in Makkos (24a) derives the prohibition from the verse “he did not perform evil with his neighbor” (Tehillim 15:3), whereas the Gemara in Sanhedrin (81a) derives the same idea from the verse “he defiled his neighbor’s wife” (Yechezkel 18:11).
The Chasam Sofer (Choshen Mishpat 79) writes that the prohibition is a full Torah injunction, basing this on a number of earlier sources. Although the Beis Yosef (Choshen Mishpat 156) writes implies that there is no Torah prohibition, but only a rabbinic prohibition enacted as a tikkun olam (regulatory law), the Chasam Sofer writes that after the Sages enacted the prohibition it involves a full Torah transgression.
Certainly, the prohibition is a very grave sin, to the degree that Rabbeinu Tam (Sefer Ha-Yashar 741) even compares it with murder! As we will see, poskim treat the prohibition with appropriate stringency.
The Same Street and the Same City
The Gemara (Bava Basra 21b) addresses a situation whereby one operates a mill in a mavuy (alley), and another wishes to open a similar establishment in the same mavuy. In modern terms, an Israeli rabbinical court (Piskei Din Rabbani’in 6:3) ruled that a ‘neighborhood’ is equivalent to the Talmudic mavuy. Does the first person have the right to prevent his competitor from opening a new mill?
In responding to this question the Gemara cites a dispute among amora’im.
Rav Huna asserts that the owner of the first mill may prevent the newcomer from setting up shop, as the newcomer will interfere with the first inhabitant’s livelihood. Rav Huna son of Rav Yehoshua, however, argues that the first miller cannot prevent the newcomer from opening shop. The competitor, as Rashi explains, can claim that “Whoever will come to me will come to me, and whoever will come to you will come to you.”
Virtually all rishonim rule follow the latter opinion, and this is ruled by the Shulchan Aruch (Choshen Mishpat 156:5), and by later commentaries (see Aruch Hashulchan, Choshen Mishpat 156:6-7).
However, even Rav Huna son of Rav Yehoshua agrees that such competition is only permitted when the new competitor comes from the same mavuy (today, from the same neighborhood), for he is just as entitled as the first businessman to earn a livelihood in that area. However, one who comes from a different city, and wishes to open a competing establishment in somebody’s mavuy, can be prevented from doing so. This is considered an unfair encroachment on another’s business.
The Gemara inquires as to whether somebody from a different mavuy, but the same town, has the right to compete, and the question is left without a decision. Rishonim rule that there is therefore insufficient basis for preventing a resident of another mavuy in the same city from opening a competing business, and this is accordingly ruled by the Shulchan Aruch (Choshen Mishpat 156:5).
Who is considered a City Resident?
The Gemara adds that even an outsider is permitted to compete if he pays taxes to the local authority. The Tur (ibid.) rules that an outsider who pays taxes is permitted to compete “like the residents of the city,” and this ruling is echoed by the Shulchan Aruch (ibid.). However, the Rema rules (based on Tosafos, Bava Batra 21b) that an outside resident paying local taxed may open an establishment in different mavuy of the city, but not in the same mavuy as the already existing business.
The application of these principles in modern times is cast into doubt by the interpretation of the Chasam Sofer (ibid.). According to his understanding, local taxpayers are considered to have effectively ‘rented’ the town, and all of its potential income, from the local authority. Therefore, a non-taxpayer cannot open a competing establishment in the town, because the potential for earning income locally has been ‘bought’ by the local taxpayers.
Clearly, today’s taxpayers do not enter into a ‘collective rental agreement’ with the authorities, and following the logic of the Chasam Sofer, it appears that today’s city dwellers will not be able to prevent outsiders from opening a rival business.
Most contemporary authorities do not uphold this blanket ruling, and understand that the principle halachah whereby an outsider can be prevented by locals from opening a competing business still applies today. Although somebody wishing to open a store will be paying a local tax, the Rema (citing from Terumas Hadeshen 342) rules that a person cannot claim the right to open a business by paying the local taxes. He must first become move into the city, and only they will he have the right to open a competing business.
However, Rabbi Yaakov Blau (Pischei Choshen, Geneivah Chap. 9, note 2) explains that in the modern business environment, it does not stand to reason that if there is one store or business in town, that store should be given a monopoly on the entire town. This is especially true for big cities, where there is plenty of room for several stores and business to make a good income.
Moreover, the Shulchan Aruch (156:7) rules that the restriction on outside competition does not apply to a ‘market day,’ when people from outside the town also come to shop. This ruling will apply in a general sense to malls and large shopping centers, which attract shoppers from out of town.
Yet, the Talmudic halachah will apply in local neighborhoods and holiday resorts. Moreover, where the original business will be threatened by closure (or severe loss of income), a certain prohibition applies, as will be explained below.
Distinction between Loss and “Definite Loss”
The principles above form a type of halachic regulation of trade and commerce, whereby the residents of a particular city will be able to earn their livings without fear of competition from outsiders.
However, beyond these basic principles, the Aviasaf (cited by the Mordechai, Bava Basra 516) rules that it is forbidden for somebody—even for somebody who lives locally—to open a store at the entrance to a mavuy satum (a dead-end alley), if a similar establishment is already located within the mavuy. The reason for this is that opening such a story will bring the original shopkeeper’s business to ruin. Potential customers will see the new store upon entering the alley, and the original establishment will go unnoticed.
The Beis Yosef (Choshen Mishpat 156) explains that the the ruling of Aviasaf follows the opinion of Rav Huna, whereby even a local resident may not compete with an already established business. As mentioned above, most Rishonim rule against Rav Huna, and in keeping with this majority opinion, the Shulchan Aruch makes no mention of the Aviasaf.
The Rema (Darchei Moshe 156:4), however, explains that according to the Aviasaf, all opinions agree that it is prohibited to open a new business if this will cause the original business (such as the one inside the mavuy) to collapse. In the words of the Aviasaf, cases of “definite damage” do not fall into the principles above, and it is forbidden for one business to cause “definite damage” to another.
In a renowned responsum (10), the Rema thus therefore rules that it is forbidden for a second publisher to publish an already published work (the case discussed the Rambam’s Mishnah Torah), if this will inevitably bring the first publisher to ruin: “[A]ccording to our law, the second publisher may not publish it at all, and the aforementioned Gaon could have prevented him…. For in a case where the damage is definite… all agree that the law is in accordance with Rav Huna.”
This principle appears in many responsa throughout subsequent generations. In particular, the Chasam Sofer makes use of the principle in a number of responsa (Choshen Mishpat nos. 41, 79, 118), and uses it to establish an author’s rights against unfair copying.
In one teshuvah, the Chasam Sofer (61) explains that “in a case… where through his entering the profession he pushes aside the competition completely, so that it is impossible for both of them to gather enough customers, and it turns out that he is pushing aside the competition completely, this is descending into another’s profession completely.
The principle is widely relied on in a broad range of business circumstances, including local neighborhood stores (where there are insufficient residents for more stores of the same kind), copyright law, and so on.
The Rabbi’s Income: A Responsum of Rav Moshe Feinstein
Shut Iggros Moshe (Choshen Mishpat 1:38) provides a fascinating an important application of the above ruling of the Aviasaf.
Rav Moshe discusses a case in which a number of congregants of a particular shul formed a ‘breakaway shul,’ whose popularity soon exceeded that of the original shul. Most of the members of the original shul joined the new shul, denying the Rabbi of the original shul the income he had been making from membership fees. The Rabbi in question had bought the shul property some three years prior, and the breakaway shul had caused him serious financial harm.
In spite of the congregants’ claim that the liturgy of the original shul confused them, and that it was hard for them to cope with the Rabbi’s angry outbursts, Rav Moshe rules that the congregants were not allowed to break away from the shul. Citing from the Chasam Sofer and the Aviasaf, he explains that the severity of the prohibition of cutting off somebody’s income cannot be offset by the congregant’s claims.
It is important to note that a number of congregants did remain in the original shul, and therefore the income of the Rabbi was not entirely ruined. Nonetheless, Rav Moshe writes that “because the congregation has become so small, so that the income is insufficient for his needs… this is certainly a prohibited case of ruining another’s income.”
What degree of damage is considered “ruining one’s income”? Rav Moshe writes that “it is simple that a person’s livelihood means the average level of expenses that a person of his stature generally requires… even if he will have enough income for limited expenses.”
Furthermore, Rav Moshe argues that in this case the second shul is not even a business venture or any sort. The establishment of the shul thus destroys the Rabbi’s parnassah without meaning to create a parnassah of its own, and it therefore all the more prohibited. This added stringency is pertinent to ‘private sales’ organized within certain communities, where products (such as meat, clothing, and so on) are sold at cost price. If these sales are liable to bring ruin to local stores, they would be forbidden.
Selling for Cheap
The principles above indicate the care that Chazal and later authorities had for existing. However, Chazal and authorities also care for the good of buyers, and the Chachamim (Mishnah, Bava Metzia 4:12) praise those who manage to lower market prices.
Based on this principle, the Rosh (Bava Basra 2:12, citing from the Ri Migash) rules that “if somebody sells for a cheaper price, he is not prevented from opening his business, because it is for the benefit of the residents.” The Beis Yosef (156) quotes that the Ramban disputes this ruling, and maintains that even when prices will be lowered, existing businesses have the right to prevent outsiders from opening a new business.
The Shulchan Aruch does not mention this issue, but the Rema (156:7, citing from yeish omrim) rules that where prices will be lowered, an existing business cannot object to an outsider’s opening a new business. Yet, based on the ruling of the Aviasaf, this principle will not apply where prices will be far lower than current prices, so that the existing business will be unable to compete.
Rabbi Moshe Sternbuch (Teshuvos Ve-Hanhagos 1:800) thus rules that it is permitted for somebody to open a rival restaurant next to an already existing restaurant (even at lower prices). However, if prices are much lower than those of the rival restaurant, so that the existing restaurant will be unable to compete, it would be forbidden to lower prices, and drive the existing restaurant out of business. The prohibition will not apply when only a number of items are sold at the lower price (so that the rival restaurant will also be able to do so).
- The Rema (156:7) rules that where the items offered by a new store are of better quality that those sold in existing businesses, the new business (even outsider) cannot be prevented from opening.
- If a store or business is opened in contravention of halachic principles, there is no obligation to pay damages to the existing stores. However, the local storeowners will have the right to demand the store’s closure (Kenesses Hagedolah 156:9; Beis Efraim 26; Masas Binyamin 27).
- It is permitted to place a tzedakah box in a location where a tzedakah box is already present. Donors will have the choice of which box to donate to, and there is therefore no case of hasagas gevul (Shut Maharsham 5:105).
In general, it should be noted that Chazal do not see competition in a negative light, and it is permitted for one store to compete with another by means of advertising, sales gimmicks, and so on—provided that other stores are able to compete, and will not be driven out of business (as noted above).
Yet, as we have seen, a person who wishes to open a new store must take the damage he is liable to cause into consideration. Even where it is formally permitted to open a store or establishment, the Shulchan Aruch Ha-Rav (end of Hefker Ve-Hasagas Gevul) writes that one should nonetheless avoid causing others a loss. Others, however (see Pischei Teshuvah 156:3, citing from Chavas Ya’ir), write that where it is permitted to open a store, one may do so lechatchilah, and there is no need for concern that another’s income might be decreased.
One who wishes to open a store or establishment, or to engage is business in general, must therefore be aware of the principles. Of course, in practical cases of doubt, a competent halachic authority should be consulted with.
The Maharsham about a tzedaka box is in 6:105, not 5:105
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