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Page last updated at 23:35 GMT, Friday, 9 April 2010 00:35 UK

'Cadbury's law' to be in Labour election manifesto

Cadbury demonstrator's sign
Kraft's takeover of Cadbury has been controversial

Labour's election manifesto will include plans to restrict takeovers of British firms on public interest grounds, the BBC has learned.

It follows the controversial takeover of Cadbury by US food giant Kraft.

The government said it was powerless to stop the deal, but will now propose that two-thirds of shareholders will have to vote yes to some takeovers.

Labour has refused to confirm or deny the manifesto leak. The Lib Dems have already called for such a law.

Cadbury's law

Labour's manifesto is understood to contain proposals to ensure that if a company is designated "strategic", or if the national interest is concerned, two-thirds of its shareholders will have to vote yes to a takeover.

Under the current law, a straight majority will suffice.

In addition, there will be rules to stop hedge funds buying up shares.

This is designed to stop speculators making a quick profit on a takeover. Under the proposals, only long-term investors will have a say in whether a company is sold.

The campaign for the so-called Cadbury's law has been led by the Unite union, but has gained popularity among those unhappy at the way in which the confectioner was bought out by Kraft.

Some observers felt Kraft should have paid more for Cadbury, and that short-term investors pushed through the deal.

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