Nutrition labels dampen competition.

• Position: YOUR LIFE

Although aimed at leveling the playing field for consumers, standardized nutrition labels actually may dampen market competition by helping large food manufacturers gain an even sharper edge over their smaller rivals, according to a study by Duke University, Durham, N.C. It found that the standardized food label disclosures created by the Nutrition Labeling and Education Act (NLEA) of 1990 resulted in a higher percentage of companies with low market share exiting various food categories after the law took effect in May, 1994. The researchers also contend that food industry leaders now enjoy a greater product distribution advantage over their smaller rivals.

"The outcomes we observed would not necessarily be expected when standardized information, like a label, is infused into the marketplace," says Christine Moorman, professor of marketing. "We expected that label information would allow firms to compete more honestly for consumers' purchases, but instead we find an unintended loss of small firms in food categories."

The researchers concluded that leading food companies benefited disproportionately from the legislation, perhaps because their greater financial resources, brand awareness, customer...