Business Halacha: Opening Another Pizza Store in Town

Question: There is a kosher pizza store in town. Can the owner restrain me from opening a competing store?

Answer: This issue, commonly known as “hasagas gevul,” is addressed directly by the Gemara (Bava Basra 21b). Tannaim dispute whether a tradesman can prevent someone from opening a competing business adjacent to his. Most Rishonim rule that the first tradesman cannot prevent him, unless the potential competitor lives and pays taxes in a different city. (C.M. 156:5)

[Nowadays, due to the significantly different economic and taxation circumstances of our  way of commerce and urban setting, it is usually not possible to prevent a competitor even  from a different city.]

However, the Gemara introduces an additional concept of “pasakta l’chiyusi” (you cut off my livelihood). If the newcomer competes in an unfair manner, such as by selling below cost, or threatens to cut off the livelihood of the original tradesman entirely and jeopardize his business - he has the right to restrain the competitor. (Pischei Teshuva 156:3; Igros Moshe C.M. #38)

Thus, the ability of the pizza store owner to restrain you from opening is very restricted. However, it is meritorious (midas chasidus) not to encroach upon someone’s livelihood. (Chavas Yair #42)

Authored by Rabbi Meir Orlian

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