The Justice Department yesterday opposed legislation sponsored by Rep. Morris K. Udall (D-Ariz.) and 40 others to create a special commission to conduct a comprehensive review of the state of competition in the U.S. economy.

"I do not believe the general study of competition or the antrrust laws contemplated by this proposed legislation is either necessary at this time or likely to result in the kind of report that would prove useful." John H. Shenefield, Assistant Attorney General for Antitrust, told the House Monopolies and Commercial Law Subcommittee during hearings on the proposal yesterday.

Shenefield complained that the proposed study was "entirely too broad and ambitious" and would duplicate much of the work done by two presidential commissions in the late 1960s.

He said the questions raised by Rep. Udall, such as the increasing trend toward concentration and the impact of the tax laws on mergers, ought to be examined, but on a more narrow, more focused basis.

"I share the concerns but differ on the method," he said. He said the approach taken by the President last week in setting up a commission to study just two topics - antitrust exemptions and what to do about complex cases - in a six-month period was preferable.

Shenefield also worried that the proposed three-year commission would take staff and resources from the already hard-pressed antitrust enforcement agencies. "Everyday, I have to make decisions not to prosecute clear violations of the law because we don't have the resources," he told the subcommittee.

Although Michael Pertschuk, chairman of the Federal Trade Commission, said his agency supported the purposes of the bill, he said "several possible disadvantages that give us concern."

He said the existence of a commission might be used as an excuse to frustrate on-going enforcement activities and to delay important legislative initiatives.

Pertschuk also estimated that the review could take longer - five years instead of three - and more money - as much as $20 million - than expected.

He said the commission staff has been working 14 months on a preliminary study of the auto industry just to determine what information they need to know before they proceed.

The FTC chairman also noted that the agency is already engaged in several broad-scale investigations of some of the key industries the proposed commission would study.

In his testimony, Rep. Udall contended that a broad review of all the factors contributing to the increasing trend toward concentration and bigness is essential to keeping the free enterprise system free.

Noting that 200 corporations control more than two-thirds of all the manufacturing assets in the U.S., compared to 400 companies 20 years ago, Udall suggested. "If the trend continues, only 100 corporations will control two-thirds of the assets in 10 years -- a staggering prospect.