BP Amoco PLC said it will proceed with its $36 billion buyout of Atlantic Richfield Co., defying U.S. antitrust regulators and setting the stage for a court fight over the merger's effects on West Coast fuel prices.

BP Amoco said it remains "ready to pursue a constructive solution" and will meet with the Federal Trade Commission on Friday in an effort to avoid litigation.

Even so, the company said it will issue notice that it will close the acquisition within 20 days, with or without FTC approval. The commission then can either allow the merger to be closed or go to court to block it.

"We will probably see the FTC sue to block the deal, and the process surrounding that could take somewhere between three and six months," said Tyler Dann, an analyst at Banc of America Securities LLC. A commission spokeswoman declined to comment.

FTC Chairman Robert Pitofsky has said he wants tough scrutiny of oil acquisitions because new mergers could limit competition and drive up U.S. fuel prices.

The Arco buyout would give BP Amoco control of nearly three-quarters of Alaskan oil production, most of which goes to make fuel on the West Coast.

The FTC's staff has argued that BP Amoco would be able to raise prices for Alaskan crude after the merger, people familiar with the dispute say. That could boost California gasoline prices, already the highest in the nation.

Arco, the seventh-largest U.S.-based oil company, agreed to the buyout last April. The two companies said they expected savings of $1 billion, including about $200 million in Alaska.

The FTC's opposition to the merger comes after the two biggest oil-industry buyouts in history. In November, Exxon Corp. bought Mobil Corp. for $85.2 billion. BP Amoco was created when London-based British Petroleum Co. bought Chicago-based Amoco Corp. for $61.7 billion in December 1998.

BP Amoco and Arco said that they "firmly believe the combination would enlarge rather than adversely affect competition."

The companies agreed to sell 175,000 barrels a day of Alaskan production, or about one-quarter of their combined output in the state, to satisfy lawmakers there.

The companies said today they were willing to make further concessions. They offered to allocate a further 210,000 barrels a day of Alaskan oil to third-party buyers under long-term contracts, the companies said.

Arco has more than 1,700 gasoline stations in California, Arizona, Nevada, Oregon, Utah, Hawaii and Washington as well as British Columbia in Canada. Just over 1,200 of the stations are in California, where Arco also has a Los Angeles-area refinery that can process about 255,000 barrels of oil a day.