International trade wars tend to be fought over trivial items such as the United States' ban on importing French foie gras, France's curbs on Japanese video-recorders or Britain's block on Chinese bras, but cross-border takeover policy may now be dictated by a row over chocolate bars. The £11bn takeover of British confectionery group Cadbury by America's Kraft Foods has caused such outrage that the rulebook on bids may be ripped up and rewritten. UK government ministers have demanded changes to prevent companies being acquired by what they regard as opportunistic bidders with no long-term regard for British national interests and the country's Takeover Panel, which polices all UK mergers, is consulting on how its rules can be changed. The Cadbury takeover has provoked a reaction that was not seen after the acquisition by foreign bidders of leading British businesses such as Abbey National bank, the Pilkington glass group, the Corus steel company or even ICI, the country's manufacturing flagship. The British business minister overseeing the Cadbury bid, Lord Mandelson, says his anger is aimed not directly at foreign bidders but the hedge funds and speculators that allow them to seize control of UK companies. "In the case of Cadbury and Kraft, it is hard to ignore the fact that the fate of a company with a long history and many tens of thousands of employees was decided by people who had not owned the company a few weeks earlier and probably had no intention of owning it a few weeks later," he says. Mandelson, a former European Union trade commissioner, denies being protectionist but admits it has become too easy to buy British companies. And he has the backing of Richard Lambert, director-general of the Confederation of British Industry, the body lobbying for the country's biggest businesses, plus many company bosses. Roger Carr, who as Cadbury's chairman fought the Kraft bid, says: "I am not an advocate of protectionism but I do believe in fairness". He left the chocolate company immediately after the American acquisition but says: "Arising from the ashes of the Cadbury takeover is a general concern that the playing field may not be level." Carr, an influential businessman and Bank of England director, suggests changing UK takeover rules to require a successful bid to have support from holders of at least 60 percent of a company's shares, not the usual simple majority. Mandelson calls his suggestions sensible but has proposed lifting the barrier even higher, to 66 percent. And the minister says shareholders in the bidding company, as well as investors in the target firm, should approve an offer. US investor Warren Buffet expressed doubts during Kraft's bid but had no vote to block the bid and Mandelson says: "There is a case a for requiring all companies making significant bids in this country to put their plans to their own shareholders for scrutiny. Kraft had to bend over backwards to avoid asking Warren Buffet for his binding opinion - although I think we all got his message." CADBURY BID CONTROVERSY One reason the Cadbury bid has proved so controversial may be because there have been so few takeovers since the global financial crisis and because the weak pound currently makes UK companies cheap. Fashions change in global M&A, but in previous decades, British firms have been big buyers of foreign firms, helped by accounting rules that did not require them to write off the goodwill purchased when US bidders would have had to take in instant hit to their accounts. Lambert at the CBI concedes that the balance of bidding has changed since the 1980s and 1990s when UK companies were doing takeovers rather than being taken over. For the past six years Britain has lost more companies that it gained, he points out, saying the UK is more open to foreign takeovers than any other country. Mandelson admits: "The UK has a very open market for corporate control - arguably the most open in the world." Government intervenes only if there are anti-trust, defence or financial-stability issues. Even protection against foreign ownership of television companies has been lifted. Carr contrasts his company's takeover with how other countries have reacted to foreign bids. "In France, the loss of Cadbury would have been out of the question," he says, citing that government's designation of the Danone yoghurt group as a "strategic asset" when PepsiCo made a bid. Sectors from casinos to drugs have been given similar protection. "Germany believes that strength at home is the first step to success abroad," he adds. "In Japan, selling a company over the heads of management in unthinkable. Even in the United States, regulations exist to protect strategic assets - and for all companies incorporated in Delaware." BLOCKED PURCHASE In recent years the US blocked Chinese buyers from purchasing the UnoCal refineries and forced P&O to resell its American ports when Dubai World took over the British company. But if bids generally - and global takeovers in particular - have been on hold during the financial crisis, Kraft's move can be seen as a sign that while companies are again keen to expand, governments are unwilling to lose businesses to bidders who will exacerbate the recession by cutting jobs. Just days after Kraft's success, Britain's Prudential company made a bold bid for AIA, the Asian operations of AIG, the American insurance group where the US government owns 80 per cent owned following its rescue. But that is a British bid for a US asset producing no squeals from either side of the Atlantic: it pays back American taxpayers and gives the US government a 10 per cent stake in Britain's biggest insurer. Nor is the UK government likely to object to foreign bids for the high-street banks that it had to rescue with taxpayers' money. Mandelson has to concede: "Britain benefits from inward investment and an open market for corporate control internationally. A political test for policing foreign ownership runs the risk of becoming protectionist. And protectionism is not in our interests."