Hazrat Umar (ra) Protecting the Market
With regard to the prohibition of dropping the prices, Hazrat Musleh-e-Maud (ra) states:
“Islam does not permit that prices be forced down by unlawful means. Forcing down prices is also an unlawful way of earning money because owing to this, powerful traders would force the smaller traders to sell their commodities at a lower price and would succeed in making them bankrupt.
“In the time of Hazrat Umar (ra), while inspecting the market, he came across a trader from outside of Medina who was selling dried grapes at such low prices that local producers and traders could not compete with. Hazrat Umar (ra) ordered the man to remove his produce from the market or to sell it at the price other traders were selling in Medina.” The traders of Medina were not asking for an excessive price; it was a reasonable price in line with their expenditure.
“Hazrat Umar (ra) ordered for him to sell it for the same price. When asked for the reasons for this order, Hazrat Umar (ra) replied that without such an order the local merchants would have suffered a loss even though they were not charging an undue price.
“It is true that some companions questioned the validity of this order in view of the saying of the Holy Prophet (sa) that market prices should not be interfered with. However, their objection was not correct, since the prohibition against state intervention in market prices issued by the Holy Prophet (sa) pertained to interference in the principles of supply and demand. The government should avoid undue interference, as it is harmful.” The market supply and demand adjusts itself. “It would provide no benefit to consumers while inflicting serious losses upon traders”, if this was not permitted, “but assigning prices is permitted.”
(Islam Ka Iqtasadi Nizam, Anwar-ul-Ulum, Vol. 18, p. 53)
Hazrat Musleh-e-Maud (ra) has explained this in detail in another place as follows:
“Among the rights of the citizens is that the trade and dealings should not be adversely impacted. We find that Islam has not overlooked this right and therefore has prohibited one from increasing the market price and selling at a higher price. Similarly, it has also prohibited one from significantly reducing the prices in order to cause loss to others and making their businesses fail. It is wrong to bring the prices down in order to see off the competition.
“Once, a trader was selling grapes in Medina at such a price which other traders could not afford to sell at. Hazrat Umar (ra) was walking by at the time and admonished the trader because owing to this act of his the other traders were suffering loss. Thus, Islam has prohibited one from selling products at an extremely high price and also from significantly reducing the prices, so that neither the traders are faced with loss and nor the members of the public.”
(Tafsir-e-Kabir, Vol. 10, p. 307)