Acquisition of other companies has become a favourite method of corporate growth. With many large corporations awash in cash and the slow nature of internal growth, many companies are on the lookout for takeover targets. The amount of such activity is often a barometer of general economic conditions. It was reported this week that Merger-and-acquisition activity in Canada jumped 47 per cent to a near-record $166 billion last year amid “ideal market conditions,” according to investment banker Crosbie & Company Inc. Despite the attendant job cuts that usually follow there is nothing inherently improper about such activity. The increased efficiencies that are often generated are beneficial to economic growth over the long term and thus society is the better for this. This is especially true when the targeted firm is inefficient; in such case attempts by management to block such takeovers would violate the prohibition of “lifnei iver”, of giving bad advice to their bosses, namely the shareholders.
Care should be taken to ensure that those individuals affected are treated fairly and equitably as they are forced to find new employment opportunities, but conceptually this is no different than introduction of new technologies that benefit society while negatively affecting some. What this means in practice is that changes should be, if at all possible, done gradually so that affected workers have time to train for and secure other employment.
While voluntary takeovers present few ethical issues hostile takeovers are a different matter. With companies finding few willing partners pressure tactics are often exerted on unwilling targets. Barrick Gold Corp.'s $10.4-billion (U.S.) ultimately successful bid for Placer Dome Inc., is just the latest example.
Jewish law rejects any form of pressure tactics and coercion on others, whether done personally, through others or even through the media. Even designing scenarios of how to prey an object away from another is prohibited; not only of the prohibitions of jealously (lo tachmod) and desiring (lo titaveh) it is also considered a form of theft. Some authorities maintain that “theft” has occurred even if the price paid is above market value, how much more so if the amounts are lower. While unethical, such tactics do not label one an evil person whose testimony would not be accepted in a court of law. Presumably the willingness to pay for the object of desire demonstrates some form of honesty. In addition continued pressure to sell would cause violation of the ona’at devarim, causing needless mental anguish to others.
At times pressure tactics would be forbidden even in the context of a willing buyer and seller. In certain transactions it is self understood that bargaining is part of the sales process and thus there would be no problem putting in a lower bid than the asking price. However once an offer is rejected attempts to try and convince the party to accept the same offer would be unwarranted.
Similar restrictions are placed on sellers. Absent explicit instructions it would not be unethical for a telemarketer to try and sell you something. If however you indicate your desire to be left alone it would be unethical to continue with a sales pitch. As Rabbi Aaron Levine points out in his recent work Moral issues of the Marketplace, Jewish Law does allow some forms of pressure to induce charitable giving; the “salesman” is facilitating that which is an obligatory act. Nonetheless such pressure would only be allowed in general terms. Undue pressure for a particular cause is not justified as the donor can rightfully say that while I must give charity I don’t have to give to this particular cause.