The Federal Trade Commission has denied a request from Sen. Edward M. Kennedy (D-Mass.) that it investigate the proposed merger of LTV Corp. and Lykes Corp. for possible antitrust violations.

Kennedy's request in a letter to FTC Chairman Michael Pertschuk last week touched off an angry response from Attorney General Griffin B. Bell, who had earlier approved the proposed merger.

Kennedy's letter implied that Bell had overriden the advice of his entire antitrust staff in deciding not to oppose the merger. Kennedy called on the FTC to open its own investigaion into the same issues.

"After careful consideration of the relevant issues, including those you raised in your letter," Pertschulk wrote to Kennedy yesterday, "the commission has determined that it would not be in the public interest to intiate such an investigation at this time."

Pertschuk did say that he shared Kennedy's concern that the merger of the two companies into what would form the third-largest steel company "could result in the elimination of actual competition in substantial product markets." But he added that "it is unclear whether a separate investigation by the commission of this merger would reach any different conclusion" than that reached by the Justice Depatment.

While Pertschuk did reiterate that both Justice and the FTC have jurisdiction in this area, he said it would be difficult to pursue the probe at this time, especially since "the antitrust division [of Justice] has indicated it would not provide not provide us with the materials it possesses."

Reached late yesterday, Kennedy said he regretted the FTC decision not to open an investigation.

"I believe the Department of Justice reached the wrong conclusion on the merits of this merger," Kennedy said, "and that the result may have serious adverse consequences for effective antitrust enforcement in general and for competition in the steel industry in particular."

Kennedy said that as chairman of the Senate antitrust subcommittee "I have responsibility to oversee the adequacy of the antitrust laws and their enforcement. In that capacity, the sub-committee reviewed some of the Justice Department memoranda."

Kennedy said his staff found that Bell's decision not to oppose the merger because Lykes was determined to a a failing company "was solidly opposed by the antitrust division which had spent seven months intensively investigating whether this merger qualified under the exemption (made for failing companies)."

Kennedy said panel "will continue its oversight of this decision."

Pertschuk revealed in his letter that FTC commissioner Elizabeth Dole would have requested access to the Justice Department files had the commission not boted against opening an inquiry.