The Federal Trade Commission staff has urged the agency to drop its three-year-old challenge to Exxon Corp.'s $1.17 billion acquisition of Reliance Electric Co.

In a 21-page legal document filed with an FTC administrative law judge two weeks ago, the staff argued that the case no longer is in the public interest. The staff said that newly obtained documents from Exxon indicated that the acquisition would not hurt competition in a small segment of the electric motor industry, which was the concern when the case began.

As a result of the staff's petition, the judge halted pretrial proceedings and sent the staff's request for dismissal to the commission for review. Only commission members can dismiss a case.

In the past year, the FTC has halted three major antitrust proceedings: a long-pending suit against the three big cereal manufacturers, its case against several oil companies (including Exxon) for alleged collusion of oil supplies, and its investigation of the automobile industry.

The FTC filed its case against Exxon just days after the oil company announced its plans to purchase Reliance. At the time, Exxon had announced it was developing a device that would control and adjust motor speeds in a way that would save as much as one million barrels of oil a day.

With Reliance being one of the chief manufacturers of the electronic variable-speed drive for electric motors, the FTC argued that Exxon's acquisition of the firm threatened to reduce competition in the industry.

Since the acquisition, however, Exxon has abandoned plans to develop the motor control device, saying it was not commercially viable.