Monopoly: an Islamic view

Prosecutors from 20 states, the District of Columbia, and the US Department of Justice, demanding Microsoft Corp. for allegedly violating antitrust rules. The Justice Department asserts that Microsoft is unfair in forcing consumers to use software products, especially the Internet Explorer web browser, through the Windows operating system, which has prevented healthy competition from taking place. The United States government has accused Microsoft of engaging in monopolistic practices.

The cases mentioned above are not the focus of our attention in this article. Our focus is whether the practice of monopoly or cartel is also a business model that is prohibited in the Islamic perspective.

islamic perspective

There are so many in Islamic literature related to monopolies, and almost all agree that monopolistic practices are strictly prohibited. The same applies to all forms of monopolistic competition (price, goods, etc.).

All those interviewed stated that a monopoly on all types of community needs is prohibited. Reasons for such restrictions, the monopoly will have enormous power to raise prices and control the supply of goods at will, and in the end it will torment the people.

Test in the Koran

Monopoly (ihtikar) comes from the word hakr, which means to collect and control goods. Ihtikar used by scholars of Islamic jurisprudence to assert the privilege of collecting and controlling goods in an effort to anticipate the need for price increases. In other words, it means the process of monopolizing ihtikar products to generate price increases.

Quran does not mention about ihtikar. The Qur’an only shows the hoarding of gold and silver. However, in the hadith it is mentioned that many muhtakir (monopolists) are sinners.

Monopoly and spirit of Islam

In an article, a consultant to the Islamic sharia Banker magazine said that the spirit of Islam is opposed to monopolistic practices and the terms of any conditions.

Dr. Zaki Badawi also argued that the same applies to the banking system and the efforts of others. Monopoly in the banking system as an example, the monopolist will provide the financial strength and business practices in the community. The spirit of Islam realizing that monopoly will give the right of undue authority to a few groups will also affect inefficiency.

However, sometimes there are events/circumstances where some Muslim groups engage in monopolistic practices. For example, the Islamic banking system in some Muslim countries has operated a national monopoly with state protection.

Such cases occur in Malaysia Islamic Bank Bhd, run by the state monopoly when it was founded in 1983, until then the Malaysian government introduced two-system banks in 1993, which allows conventional banks to open banking services without the Islamic banking interest. appropriate.

Although there are many opposing views, especially those related to monopolistic practices recently, most experts argued that monopolistic practices in all its forms in the field of trade, financial policy and contrary to Islamic principles.

Crossing the thin line

The question that arises is can Muslim men participate in company activities or invest in businesses involved in monopolistic practices that are not against the law and illegal activity?

According to the definition of significant monopoly in supply pools and a player to exploit consumers and workers, many scholars tend to claim that monopoly is opposed to the practice of law in Islam.

However, experts have argued subjectively. According to a hadith it says that, ihtikar only items related to household needs and motivation to store items that can trigger or anticipate rising prices of goods in the market.

The current monopoly, as a practice generally carried out by some companies, not only controls supply to affect prices, but also to maintain business, the government’s desire and market penetration (by making significant price drops). Currently, the most harmful monopolistic rival companies in the same industry than the opposite consumers.

Returning to the case of Microsoft, several Islamic fund institutions have been delisted from the sharia list of Microsoft shares. However, monopolistic practices are more acceptable than those based on interest practices.