Hearst and MediaNews Group have settled with San Francisco businessman Clint Reilly, who was suing the companies for antitrust violations. The deal announced this morning averts a trial that would have begun Monday in U.S. District Court in San Francisco that had the potential of forcing MediaNews to divest itself of the San Jose Mercury News, Contra Costa Times, Monterey Herald and St. Paul (Minn.) Pioneer Press. The MediaNews chain headed by Dean Singleton acquired those papers for $736 million in August 2006 with money from Hearst Corp., the Bill and Melinda Gates Foundation and other investors.

The deal calls for:

• Hearst and MediaNews to limit their cooperative business efforts in the Bay Area. We will post more details about what this means when that information becomes available.

• the companies to renounce a proposed agreement to combine local distribution and national advertising operations.

• Reilly to get a seat on the editorial board of a MediaNews Group paper of his choosing for three years. MediaNews papers include the San Jose Mercury News, Contra Costa Times, Oakland Tribune and Marin Independent Journal. He can also recommend one member for the editorial boards of each of the chain’s other Bay Area papers for the same period, subject to the papers’ approval.

• Reilly to receive a quarter-page of free space for “personal copy” once a week in the local news sections of each of MediaNews’ Bay Area papers, also for three years. It will not be labeled as advertising.

• the companies to reimburse Reilly for his attorney fees. The amount hasn’t been disclosed. Reilly was represented by Joe Alioto.

• Reilly to receive agendas and minutes of the California Newspapers Partnership’s meetings, the entity through which MediaNews controls the Merc, Contra Costa Times and its other papers in the area.

• the unsealing of all records produced during the litigation.

Significantly, the Hearst’s Chronicle didn’t agree to give Reilly editorial space or a position on its editorial board.

Hearst said in a statement that the U.S. Justice Department was continuing a review of its deal with MediaNews and that it was confident the companies would be allowed to proceed with their plans.

Reilly said he was “very excited to see that the Chronicle has severed all business or potential editorial ties with MediaNews in the Bay Area.” He said his oversight will “ensure that there will be no reneging on these commitments and there will be vigorous competition between MediaNews papers and the Chronicle in San Francisco.”

Coverage: The Chron’s SFGate.com (11:24 a.m. today); Merc’s first version (11:38); Merc’s second version (11:46); AP (11:48); Press Release.