by Elliot Dine and Sam Englender
Last week we discussed the geographical limits on competition found on Bava Batra 21 and how early commentators understood and ruled on these issues. In general, halakhah is more likely to restrain competition that sets up shop locally but belongs to owners from outside.
This week we focused on various conceptions of legitimate and illegitimate competition brought down in Tosafistic and Spanish (specifically Catalonian) commentaries. In order to fully grasp these conceptions, we first had to look at the other sources in the Talmud that Tosafot bring into this halakhic conversation.
One such source, Mishnah Bava Metzia 10A, rules that even if one falls on an ownerless object, someone else can come, physically take it, and thus legally own the object. The Gemara extends this principle to cases of poor people picking from pei’ah (grain left unharvested for the poor in the “corners” of fields), meaning that one cannot take possession of Pei’ah just by falling on it.
A second source, Bava Batra 54B, discusses two statements made by Shmuel (the amora, not the prophet). Shmuel’s first statement maintains that land sold by a non-Jew to a Jew is considered Hefker (ownerless) during the time between the non-Jews’ receipt of payment and the Jews’ receipt of the deed. This allows a second Jew to come and work or live on the land and then claim the land as his own if he does so before the deed is transferred. The Gemara has a hard time squaring this statement of Shmuel with his more well-known rule of Dina Dimalchuta Dina (the law of the land is the law), as the law of the land at the time said that land could only be acquired via the deed. Rashbam also finds Shmuel’s statement troubling and thus writes that although the second Jew owns the land he gets the status of “Nikra Rasha,” “called wicked” – language we saw last week and will discuss again below.
Rabbi Klapper showed that Tosafot use these sources to draw out 4 variables that serve as the underlying principles for all Halakhic cases dealing with economic competition. Seven of these cases are listed below:
- From Bava Metzia 10a – A poor person does not acquire pei’ah just by falling on it.
- From Bava Batra 54B – If a poor person climbs an ownerless fruit tree and shakes the branches, it is “Rabbinic theft” for someone else to take the fruit that falls underneath it.
- From Kiddushin 58B and the first week of SBM – If a poor person is negotiating for a loaf of bread (ani Mehapech BiChrarrah), someone who takes the loaf before from him is Nikra Rasha.
- A Jew has the right of first refusal on all land sold by his Jewish neighbor. This is known as the rule of Bar Metzra.
- From Bava Batra 54B – Shmuel’s statement about non-Jewish real estate discussed above.
- From Bava Batra 21B – We forbid other fisherman from setting up fish traps within a Parsa of where a first fisherman set up his trap.
- The prohibition against entering into someone else’s profession (Yored Leumanut Chavero).
Based on these cases, Tosafot draw out 4 variables that differentiate between proper and improper competition. The variables are as follows:
- The amount of effort that went into acquiring an object (based on case 2).
- The ease of access to acquiring an object or wages (based on cases 1, 3 and 5).
- The effect of competition on the first party’s livelihood (based on cases 3 and 7).
- The force given to meta-principles such as Lifnim Mishurat Hadin (based on cases 3, 4 and 5).
Based on these variables, in cases where a second party enters into competition or negotiations when a first party is already engaging in that business or negotiating to do so, Rabbeinu Tam (as we have seen his position presented thus far – Rabbi Klapper warned us that there are multiple and differing reports of his position) rules this competition is improper if any of the following criterion are met:
- If the first party made a demonstrable effort to obtain the object or business.
- If a similar object or business can be easily acquired elsewhere.
- If the competition will be ruinous for the first party’s livelihood.
- If there are no meta-principles that need to be considered.
The 13th and 14th–century Spanish Talmudists (School of Ramban) responded both to Rabbeinu Tam’s rulings and to the rulings of earlier Spanish Halakhists such as RIF (R. Isaac of Fez) and Rabbi Yosef Ibn Megas’ (in their comments to Bava Batra 21B) that we began studying last week.
Ramban initially responds to Rabbeinu Tam by declaring case 6 above (fish traps) as a case of Gezel Gamur (full-on theft). His ground is that a fisherman setting up traps within one Parsa of another is engaging in ruinous competition, and therefore it makes sense that it is forbidden as it meets one of Rabbeinu Tam’s criteria, criterion C. However, Ramban and other Spanish Talmudists also attribute ideas to Rabbeinu Tam that the Tosafist commentaries did not present. For example, Ramban quotes Rabbeinu Tam as establishing a difference between people who engage in crafts (Omanim) and those who sell other people’s goods (Socherim), arguing that the rules of competition only apply to Omanim and not to Sochrim. Ritva brings another distinction and claims that according to Rabbeinu Tam people have full rights to compete within a local marketplace if they pay local taxes, even if they have not established local residence.
One can easily see how these rulings might affect how we apply the halakhot regarding competition to modern-day situations, and yet we must also consider how much weight to give these interpretations when we don’t have firsthand access to the original rulings.
(This problem also applies to a responsum reported in the name of Aviasaf, a lost book by RAAVYAH, regarding whether opening up a competing business in a cul-de-sac can be considered ruinous competition and whether we consider ruinous competition illegal.)
Before applying the commentaries of the Spanish Talmudists to modern-day situations, we also must consider whether the economic theory underlying their positions matches contemporary economic theory. Ri Migash, Ramban and Nimukei Yosef all bring up issues regarding the interests of consumers versus sellers when discussing Rav Huna brei d’Rabbi Yehoshua’s position that foreign merchants can be prevented from entering local marketplaces. Ri Migash, as we saw last week, allows free entry for foreign merchants if their goods are cheaper or of better quality than the ones provided by local merchants. Ramban objects to Ri Migash’s distinction and claims that local merchants can be ordered to match the outsider’s prices, or failing that, new local competitors can be authorized. Prices should be set at a point that is fair to consumers but nonetheless allows businessmen to prosper. However, Ramban’s solution only works in a world where the local Beit Din has enough power to set prices and enough economic expertise to set socially beneficially prices. Nimmukei Yosef endorses the Ramban’s solution with the caveat that foreign merchants may enter if their products are “vastly cheaper” than the ones sold locally. However, it is not clear what exactly is to be considered “vastly cheaper.”
This past Thursday, SBM had the wonderful opportunity to hear from two economists specializing in competition, Dr. Ted Rosenbaum of the Federal Trade Commission and Professor Martin Gaynor of Carnegie-Mellon University. They helped us understand whether economic presuppositions of the Rishonim match contemporary understandings. The economists set up an experiment in which all of the SBM fellows were in an ad-hoc marketplace. Through our marketplace haggling we were able to understand how competition leads to lower prices and a more efficient marketplace (one in which every transaction that benefits both parties has taken place) as compared to monopolies, and about different metrics one can use to measure the success of a marketplace. Ri Migash simply applied the formula “greater competition = lower prices.” Ramban and Nimukei Yosef recognize the price effects of competition, but nonetheless seek to restrain it under some circumstances. Why? What advantages might regulated monopolies or protectionist policies have over a fully competitive marketplace? Dr. Rosenbaum’s and Professor Gaynor’s presentation provided us with a better understanding of modern economic theory that may help answer these questions when trying to apply halakhic sources to today’s economic reality.