A group of investors that lost in the competition to buy United Press International filed a lawsuit yesterday seeking nearly $1 billion in damages from the financially troubled news service, its employe union and the winning bidders for UPI.

Financial News Network, the syndicator for the investor group, charged that the parties named in the suit conspired unlawfully to determine the outcome of the bidding for UPI, an international wire service with headquarters in Washington, D.C.

Mexican newspaper publisher Mario Vazquez Rana and Houston developer Joe E. Russo pooled their resources in early November to win the bidding with a $41 million offer for UPI, which has operated since April under protection of the federal bankruptcy court. That offer was endorsed by UPI management, the Wire Service Guild and a committee of UPI's unsecured creditors.

FNN's suit alleges that UPI, Vazquez, Russo, the guild, the creditors' committee and individuals representing those groups "entered into a combination and conspiracy to use any means necessary to prevent FNN from achieving control of UPI or its business and to make certain that Vazquez achieved such control."

The suit, filed in U.S. District Court for the District of Columbia, alleges that the defendants' conspiracy involved "unlawful activities," including violations of federal fraud, racketeering and antitrust law, breaches of contract and breaches of fiduciary duty.

FNN is seeking a total of $975 million, including $625 million in actual damages and $350 million in punitive damages.

UPI management said yesterday it had not seen the FNN suit and could not comment on it. But the company issued a statement noting that "there are many lawsuits pending between the various parties involved in UPI's acquisition, and it is not surprising to learn that there is another."

Early last month, Vazquez sued FNN for $50 million, charging that FNN was trying illegally to interfere with the sale by pressing its bid after the Vazquez offer was chosen Nov. 12. The union filed a similar suit, and U.S. Bankruptcy Court Judge George F. Bason Jr. granted a temporary restraining order preventing FNN from soliciting individual UPI creditors or clients.

In a lengthy hearing last month, FNN contended that its bid was better than the Vazquez/Russo offer, and that it was not given fair consideration in the bidding process.

Judge Bason rejected FNN's contention that it had been treated unfairly and refused to reopen the bidding process.

The union and the creditors' committee have said that they preferred the Vazquez/Russo proposal on Nov. 12, the deadline for a decision, because it was a firm bid with a guarantee of $15 million in working capital. Both groups criticized the FNN offer because of certain conditions attached, and because it lacked a pledge of working capital. FNN later dropped the conditions and sweetened its bid, but the other parties contended that FNN had missed the deadline.

UPI said at the time that the Vazquez/Russo bid was worth a total of $41 million, compared with FNN's total offer of $32 million. The two packages differed in the amounts they offered the unsecured creditors and in the ways they would divide the money among different classes of creditors.

The Vazquez/Russo bid was "the best of those available at the time," William Morrissey, president of the Wire Service Guild, said yesterday. The FNN proposal was "so tenuous that it was of no real value," he said.

Morrissey and other parties named in the suit said they had not seen it yesterday and could not comment.

The suit filed yesterday is only a claim for damages and does not seek to reopen the bidding process or force the sale of UPI to FNN, said Joseph J. Levin Jr., an attorney for FNN, which operates a national cable television news and information service. "This is a serious claim for damages," he said.

George B. Weathersby, a defendant in the suit and an adviser to the company formed by Vazquez and Russo to buy UPI, said the issues raised in the FNN suit already have been settled in the bankruptcy court.