SYDNEY (Reuters) - Large companies planning a takeover in Australia will first have to seek clearance from the antitrust regulator, which will be able to block small deals that "entrench" a big firm's market power, under sweeping changes to the country's buyout rules to be unveiled on Wednesday.

Instead of leaving the Australian Competition and Consumer Commission (ACCC) to investigate deals after they are publicly disclosed, would-be purchasers will have to get a green light first or the deal will be void, the federal government said.

Rather than only being able to block a deal that would, on its own, hurt competition, the ACCC will be able to consider a company's purchases over the last three years and stop smaller buyouts that contribute to an accumulation of market power.

ACCC Chair Gina Cass-Gottlieb said the changes would "strengthen Australia's merger laws, which will benefit Australian consumers and businesses of all sizes, as well as the wider economy".

The changes put Australia's mergers and acquisitions laws in line with most other developed countries which require advance notification to the regulator, and will speed up most ACCC rulings, said Treasurer Jim Chalmers who called the changes the biggest in 50 years.

"Australia's approach to mergers is no longer fit for purpose," Chalmers said in a speech scheduled in Sydney on Wednesday, according to a copy sent to media in advance.

"Our voluntary system means the ACCC isn't properly equipped to detect and act against anti-competitive mergers," the speech added.

"The changes ... will bring our merger settings into the 21st century."

The threshold for mandatory M&A notifications would be based on market share, revenue or transaction value, a Treasury document shared with Chalmers' speech notes said.

Australian M&A activity was worth $22.9 billion in the first quarter of 2024, down 36.5% on the same time last year, according to LSEG data.

The decline was driven by a 49% fall in corporate buyout activity from overseas investors into Australia, the data showed.

The ACCC has long said it often learns about transactions when they are well underway, making it harder to intervene if it considers a deal anti-competitive.

"These proposed changes are significant and will reinforce public confidence in Australia's competition laws," Cass-Gottlieb said in a statement.

The regulator has also said it is unable to stop smaller deals which, on their own, don't substantially hurt competition but do contribute to overall market imbalance, which it refers to as "creeping acquisitions".

Under the new rules, which would take effect on Jan. 1, 2026 if approved by parliament, the ACCC will be able to block a deal that "creates, strengthens or entrenches a position of substantial market power", according to the Treasury document shared with Chalmers's speech.