Spiritual and
Ethical Issues Religious and Ethical Challenges of Money [6] by Dr. Meir Tamari COERCION IN MARKETING QUESTION (from the Av Bet Din, Akinou): ANSWER: "According to Rabbi Huna [Bava Batra 21b], the original storekeeper cannot prevent newcomers from opening similar businesses, where this does not completely choke off the livelihood of the veteran. [This support of free entry of new firms is the halakhic norm. It recognizes people's right to do as they see fit with their assets, acknowledges the benefits of free competition and generally does not recognize any restrictive rights accruing to a veteran simply as a result of being the first]. However, we cannot apply this to our case, because of the ruling of Ibn Migas restricting a seller from distributing gifts to children [non-price competition] in order to encourage them to buy from him in preference to another storekeeper. Ibn Migash ruled that in cases where such non-price competition effectively pre- vented the customers from buying from a competitor, we rule like Rabbi Yehuda and not like the Sages who permitted giving of such gifts; normally the halakha in this regard would be like the Sages. The restrictive law of fishermen having to distance themselves from one who had already spread his nets in a certain spot, could perhaps be used to prevent storekeepers from encroaching on an existing business. We could argue that just as the original fisherman was already certain of the fish in his territory, so too, the veteran storekeeper could be certain of his customers; therefore to permit newcomers would permit theft, just as in the case of the fisherman. That argument has not been accepted, since, unlike fish in the area of the net, one cannot be certain of the customers until a sale has actually been made, and therefore, the competition would be permitted (Ran - HaShutafim and also Rabbenu Tam, Kiddushin59a) However, in our case none of these permissive arguments apply since Shimon competes through his threats not to grant the villagers their licenses for collecting the shells if they buy from the veteran. [This is oshek - coercion, which is tantamount to robbery]. Therefore, he is not allowed to open the new store. Even if he promises not to threaten the villagers, he may not open the new store, since such a person cannot be trusted to keep his promise. However, if he were to sign such an agreement before the Beit Din, then he may open his store." Teshuvot Avnei Nezer 24; Avraham, Admor of Sochochow, 5668 [1908]. The moral issue of coercion in marketing is one that takes many forms, over and above the use of blatant force or of power. All these forms, in addition to the immorality inherent in their use, disrupt the efficient working of the market mechanism. Advertising which exploits ethnic or racial differences in order to convince or prevent consumers from buying goods or services has often been used by majorities to harm minorities economically, as anti-Semites have done to destroy the economic basis of the Jews. Ironically, minorities have often used the same advertising to protect themselves, a form of sectarian or ethnic affirmative action: "Buy from or hire your own kind". Large firms in general, often exploit the small firms by delaying payments and, when they are the sole suppliers or customers, they use the power of their size to obtain price or marketing advantages. High pressure salesmanship, badgering consumers especially the elderly and the poor, and taking advantage of people's ignorance of the market price or quality of goods and services, are all widespread examples of coercive marketing techniques that while they may be legal, are immoral. All the Codes include coercion in their definition of gezel/robbery and trace it to coveting and lusting after the property of others. "One covets another's possessions and wishes to buy them from him, but the latter does not wish to sell [even at market price]. Then the buyer pesters him or uses his friends and relatives to bring pressure on the reluctant seller [like pressure on shareholders in a hostile takeover]. Such a one transgresses the negative commandment, "You shall not covet". If one lusts after another's assets and plots in his heart how to buy them [since the owner refuses to sell], one transgresses the commandment, "You shall not covet and you shall not lust after a neighbors house, nor a field... nor anything that belongs to your neighbor". That lusting leads to coveting, the coveting leads to robbery where the neighbor refuse to sell despite the buyer's raising the price or bringing social pressure on seller, and to murder when the owner resists" (Hilkhot G'zeila 1:3,9, 10 and 11). There is a further negation of coercion in the protection granted halakhically through the concept of a just price, ona'ah. Thereby a transaction at a price differing from the market price by more than 1/6th may be cancelled or the price differential refunded. Ona'ah does not apply where both parties are made aware of market conditions. It does however apply where one of them claims that while he knew of the overcharge and agreed to it, nevertheless he only did so under duress. This is based on the Talmudical story of one, who fleeing from enemies who wished to kill him, agreed to the overcharging by a ferryman. When they arrived on the shore, he demanded a refund of the overcharge under the law of Ona'ah, since he agreed only under duress. The Rabbis upheld his claim. Subsequently, based on this Talmudical ruling, a rabbi upheld the claim of a clothing manufacturer to protection of Ona'ah, since, under pressure of fulfilling a major contract for army uniforms, he had agreed to the overcharge by his supplier. It is both good and honest to do everything necessary in order to show the buyer the real value and beauty of the article [through proper advertising and attractive packaging]. However, for us to hide and cover defects [in information and pricing], is nothing less than deceit and is forbidden" (Ramchal, Mesilat Yesharim 21) [The Parshat Vayishlach Homepage]
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