For the third time in as many collusion decisions, an arbitrator yesterday ruled Major League Baseball owners conspired to kill free agency and depress salaries after the 1987 season.

The owners lost decisions regarding their activities in the 1985 and 1986 free agent markets, and their final bill for damages could eventually exceed $70 million.

Players involved in the first case, nicknamed Collusion I, were awarded more than $10.5 million in an initial damages ruling.

George Nicolau, the arbitrator who ruled on Collusion II, wrote in a 34-page decision there was was an increase in player movement in 1987, but that "does not mean that the market itself was 'free and unencumbered.' "

The Major League Baseball Players Association had filed a complaint about a computer registry the owners' Players Relations Committee created so clubs could find out about offers being made to 1987 free agents. The union said the pooling of such information violated the collective bargaining agreement. The PRC said participation in the registry was voluntary. The registry was abandoned in 1988, before that year's free agent signing period began.

Nicolau ruled: "The bank's message was plain -- if we must go out into that market and bid, then let's quietly cooperate by telling each other what the bids are. If we all do that, prices won't get out of line and no club will be hurt too much."

Seventy-six players are involved in Collusion III, including third baseman Gary Gaetti, infielder Paul Molitor, first baseman Jack Clark, outfielders Brett Butler, Chili Davis and Dave Henderson, pitchers Dennis Martinez, Jack Morris, Dave Righetti and Dave Smith. Based on previous collusion rulings, some of these players may become free agents.

"Obviously, we are very pleased with this decision, but not surprised by it," said Donald Fehr, the MLBPA's executive director. "Our view from the very beginning was that the information bank represented continued collusive behavior by the clubs and that it could not be permitted to continue."

Nicolau, who has not yet ruled on damages in Collusion II, now will hold further hearings on damages in the latest case.

In the first two cases, the union claimed the owners collectively decided to not sign free agents as a means of restraining salaries.

Thomas Roberts, the arbitrator for Collusion I, allowed seven players involved in the case to become free agents in January 1988. Kirk Gibson, then with the Tigers, was the only one to sign with a new team. He received a three-year, $4.5 million contract from the Dodgers and led them to the World Series championship following an MVP season. Roberts later made his ruling on monetary damages. The union is seeking further compensation in the case.

Nicolau granted free agency to 12 players in October 1988. The owners say collusion cost the players a minimum of $70 million. The union says the total is much greater.

The owners had an opportunity to settle the entire issue of collusion during the collective bargaining negotiations that took place earlier this year. It is believed they could have made a payment to the players in exchange for the abandonment of all pending cases. Now, they may have to pay in cash and loss of goodwill.

"We strongly disagree with" Nicolau's ruling in Collision III, PRC Executive Director Chuck O'Connor said in a statement. "It should be understood that the events underlying today's ruling occurred over two years ago -- in the winter of 1987-88. . . . The clubs hope the parties can now promptly put the free agent litigation behind them and continue the work of developing a more productive relationship."