Category: the book of sales Transactions

The ruling on conspiring secretly to prevent an increase in the price of an item

Question :

When the public auction is held for some product and the buyers attend, they devise a scheme to benefit some of them in profit. This is that they work together in a way that the seller or the owner of the product does not know. What will happen is that everyone who is interested in the item will stop bidding (at a low price) because they are actually partners. The goal behind this is to prevent an increase in the price of the product. I would like to know the ruling on that. Is the sale correct that is made to one of these partners if this happened?

Answer:

Secret conspiring by the buyers in an auction or any other sale in order to stop the price of the product at a specific limit and their scheming to prevent any increase in the price is forbidden. This is due to what that contains of despised selfishness and harm to the owners of the products. Both selfishness and harm of a person against someone else is prohibited, and they are despicable characteristics that are not befitting of the Muslims. Islamic Law is not pleased with such characteristics. This practice also is contained in the meaning of fixing prices unnecessarily and the issue of meeting the caravan (i.e. before it comes to the market to adjust the prices) and similar practices which contain harming of an individual or a group by others. This also fosters grudges and ill feelings, and it leads to devouring the wealth of the people in falsehood. Indeed the Prophet prohibited meeting the trade caravan (before reaching the markets in order to fix prices), the city dweller selling for the desert dweller, and fixing prices unnecessarily. He also forbade a man offering to buy while his brother has already made an offer, his offering a sale while his brother is attempting to make the sale, his proposing to a woman while his brother has already proposed to her, and whatever is similar to this in meaning. This is due to what these things contain of injustice, harm and causing grudges. Based upon this, the seller who has been tricked into not getting more profit from (the price of) his product is given the choice if it becomes evident that he was cheated out of his product. If he wishes, he may request to cancel the sale, and if he wishes, he may let it go.
May Allah send blessings and peace upon Muhammad, his family and his Companions.

Source:
The Permanent Committee
Fatawa Islamiyah, Vol. 4 Pages 444-445-446