The Justice Department dropped a nine-year-old antitrust case yesterday against General Electric Co. that charged GE with using anticompetitive reciprocal purchasing arrangements with customers and suppliers.

Assistant Attorney General for Antitrust William Baxter has said he is unlikely to bring new reciprocity cases, but he said yesterday the GE suit was dropped because "the passage of time has greatly reduced the significance of the case and of any injunctive relief the government ultimately might win."

The suit was filed in Syracuse on May 18, 1972, alleging that the reciprocal arrangements between GE and its customers foreclosed competitors from selling goods to GE's customers and barred potential suppliers from selling products to GE.

A GE motion to dismiss the case has been pending since April 1977, just after the government finished presentation of its case, but the judge never acted on the motion.

In another Antitrust Division matter, agency staffers have completed the first stage in their review of the proposed merger between Joseph Schlitz Brewing Co. and the G. Heileman Brewing Co., Schlitz and other sources said yesterday.

Division staff members have recommended that the government oppose the $494 million transaction, which has been approved by the directors of both companies.