The bidding war for Conoco Inc. continued to escalate today.

E.I. du Pont de Nemours & Co., the nation's biggest chemical concern, announced that it would add $500 million in cash and stock to its week-old, $6.9 billion offer to buy the nation's ninth-largest oil company. Both Conoco and Du Pont boards have ratified the sweetened merger offer, Du Pont said in a statement.

The revised Du Pont bid is designed to upstage last Sunday's offer by the Seagram Co., the big Canadian distiller, to pay $85 a share for 51 percent of Conoco's outstanding stock, an offer that would put $3.77 billion of cash into the pockets of Conoco stockholders.

Seagram said it feels its offer is "still fully competitive." Seagram said it "emphasizes" that unlike Du Pont, which has conditioned its offer on obtaining a majority of the 86 million outstanding Conoco shares, Seagram's offer is unconditional. The distiller will pay $85 for every share it receives up to 44.35 million and reserves the right to purchase more.

Seagram's offer has cleared the Securities and Exchange Commission. Du Pont's filing with the SEC is expected to be approved later this week. Until it clears the SEC, Du Pont can make no formal offer to Conoco shareholders.

Meanwhile, the Justice Department, in a terse announcement, said the Cabinet-level agency and the independent Federal Trade Commission had agreed to let Justice's Antitrust Division "investigate" the Du Pont bid for Conoco.

The decision, the product of a telephone conversation today between Assistant Attorney for Antitrust William Baxter and Acting FTC Chairman David Clanton, ended a staff disagreement between the two agencies over which would review the merger. Justice also was granted authority to review the Seagram's bid.

"At some point, you have to make a cut as to who will take on a matter," Clanton said in an interview. "We've gotten big ones, too," he noted, pointing out that the FTC will review the proposed takeover of Texasgulf Inc.

Under merger rules, the government is given 30 days from notification of a takeover to review the deal for possible anticompetitive conduct. If the government seeks more information from the parties, an additional 20 days for consideration would follow that request. Sources indicated that the Justice Department is unlikely to issue a quick decision on the Du Pont or Seagram offers.

Du Pont Chairman Edward G. Jefferson said today his firm's offer "is in the long-term interest of the two companies and their shareholders." Du Pont said it is willing to pay $95 a share for 40 percent of Conoco stock (about 34.44 million shares) -- a cash outlay of about $3.27 billion -- and exchange 1.7 shares of its stock for each of the remaining Conoco shares. Based on Du Pont's most recent price of $47.25 a share, the stock portion of the transaction is worth about $4.14 billion. Trading in Du Pont was halted on the New York Stock Exchange at 11:18 a.m. today and did not resume.

The total $7.4 billion offer would be the largest corporate merger in history if it comes off. The cash and stock offer has a combined, weighted average price of about $86.20 for each of the 86 million outstanding shares of Conoco, based on today's $47.25 price for Du Pont stock.

When Du Pont announced its initial offer a week ago Monday, in a White Knight attempt to rescue Conoco from the unfriendly Seagram offer, the value was $7.3 billion -- $3 billion in cash and $4.3 billion in stock based on Du Pont's July 2 closing price of $51.25 a share. But Du Pont's stock declined after the merger proposal was announced, and the value of that initial bid today is $6.9 billion.

Mobile Oil Co. said Monday that it was arranging a major loan through New York's Citibank (which banking sources said totaled $5 billion), and Mobile Chairman Rawleigh Warner indicated the nation's second-largest oil company was interested in making a play for Conoco, too. But no offer has been made, and last night a Mobil spokesman said he would have no comment on the situation.

Texaco Inc., the third-largest oil company, reportedly has arranged a $5.5 billion line of credit and is said to have its eye on Conoco and other oil companies.

Conoco Chairman Ralph Bailey, in a statement, said that Conoco and Du Pont have agreed to merge the two companies and that the merger would be the best "opportunity" for Conoco shareholders, who would benefit from a combined company. Du Pont's interest in Conoco is piqued by the company's oil holdings, which would give Du Pont a captive source of oil for its petrochemical operations.

According to the oil industry publication Petroleum Outlook, the value of Conoco's oil reserves is equivalent to $239 a share. Conoco also owns the nation's second-largest coal company, Consolidation.

Du Pont said that it has arranged lines of credit for up to $4 billion, $1 billion more than it said it had arranged last week.

Du Pont said the deal it will propose to Conoco stockholders is "intended to be structured to permit a tax-free exchange for Du Pont shares." Any profits Conoco shareholders make on the cash portion of the transaction would be taxable. Seagram in its statement today, said it thinks there is a "substantial possibility" that the whole Du Pont offer is "fully taxable."

In another development, a federal judge here declined to issue an injunction sought by Conoco against the Seagram tender offer. Conoco, which negotiated privately with Seagram last month before turning down a friendly offer from the distiller to buy 25 percent of the oil concern's stock, charged that Seagram violated an agreement with Conoco not to make an "unfriendly" bid for Conoco stock.