The Federal Trade Commission yesterday dropped its antitrust case against B.A.T. Industries Ltd. of England for the 1978 purchase of Appleton Papers from the NCR Corp.

The 4-to-0 decision, written by FTC Commissioner George W. Douglas, upheld an administrative law judge's ruling in 1983. A 1980 FTC complaint had charged that B.A.T.'s acquisition of Appleton would substantially lessen domestic competition in the manufacture of chemical carbonless paper.

That product is used to make business forms allowing the writer to make several copies by applying pressure to the top sheet.

B.A.T. already was the largest producer of chemical carbonless paper in the United Kingdom and Europe, and its purchase of Appleton for $299 million made it the world's largest producer, accounting for over 40 percent of the market, the FTC complaint said.

The complaint argued that B.A.T. was a "a significant . . . potential entrant" into the U.S. market by itself, and the acquisition of Appleton diminished prospective competition. But the commission found "the record evidence is not sufficient to constitute clear proof that . . .[B.A.T] would have entered the United States carbonless paper market independently if it had not acquired Appleton."

The commission said a number of obstacles prevented B.A.T. from competing on its own in the United States for sale of the paper, and it likely would have taken the company two to four years to do so.

To find a violation of law, the commission noted, it must establish "that if the acquisition had been prevented . . . [the company] clearly would have entered the market in some other fashion. The record evidence does not satisfy this burden."

B.A.T. has its headquarters in London. Its other U.S. holdings, administered through Batus Inc., include the tobacco company of Brown and Williamson, the retail stores of Gimbels, Marshall Field and Saks Fifth Avenue, and the cosmetics firms of Germaine Monteil and Yardley.