The takeover Panel as launched a review of the rules governing mergers and acquisitions in the wake of Kraft's £11.7bn purchase of Cadbury earlier this year.
The public consultation could lead to major changes in takeovers in this country, including raising the minimum acceptance threshold beyond "50 per cent plus one" and restricting the fees paid to investment bankers.
The Panel said that given the significance and nature of the issues raised by the Cadbury sale, it had decided to "break with its usual practice" of setting out specific proposals and recommending drafting amendments to the takeover code.
It is the first time in five years the panel has launched this type of wide-ranging public consultation. Vince Cable, the Secretary of State for Business, said: "Getting the UK takeover framework right for the future is an important step in the Government's efforts to renew and reform the way markets work.
"This is not about economic nationalism. We welcome foreign investors but we want all shareholders to be empowered, the takeover process to be more transparent, directors to think about their wider long-term legal duties, and takeovers to be decided on the basis of long-term shareholder value rather than short-term speculation."
Mr Cable's backing of the review follow comments made by his predecessor in the Labour Party administration, Lord Mandelson, who was highly critical of aspects of Kraft's acquisition of the Dairy Milk manufacturer in February.
In December, Lord Mandelson warned Kraft – whose UK brands include Philadelphia cheese, Terry's chocolate and Kenco coffee – against making a "fast buck".
Last week, the Takeover Panel criticised Kraft for failing to fulfil its pledge to try to keep open the Cadbury factory at Somerdale, near Bristol, days after completing the acquisition.
The deadline for interested parties to respond to the consultation is 27 July. Other issues under the panel's spotlight include whether safeguards should be reintroduced in relation to large purchases of shares, and whether the 28-day period from revealing a firm intention to make an bid and publication of the offer document should be shortened. The watchdog said it continued to "maintain an open mind on the issues raised".