The U.S. Department of Justice issued a statement this afternoon saying it had concluded its antitrust investigation of Hearst Corp.’s $317 million purchase of 31 percent of MediaNews Group’s holdings outside the Bay Area, and that the two companies will “continue to be subject to scrutiny.” The statement indicated the government will not block the deal, which closed last Friday. The statement said in part:

“Hearst’s investment in MNG — its principal newspaper rival in the Bay Area — raised potential competitive concerns warranting investigation despite the parties’ assertions that they had structured Hearst’s proposed investment to give Hearst no equity interest in or influence over MNG’s Bay Area businesses. The [DOJ Antitrust] Division’s investigation focused on whether the proposed investment would give one party an incentive to compete less vigorously in the Bay Area or would provide sources of influence by Hearst or MNG over the other’s Bay Area activities. During the investigation, the parties modified the proposed transaction in an effort to mitigate antitrust concerns raised by the Department.

“Because Hearst’s minority investment in MNG will not bring the companies under common ownership or control, interactions among them — including any changes in Hearst’s investment and related arrangements that affect competition among the companies’ Bay Area newspapers — will continue to be subject to scrutiny under Section 1 of the Sherman Act as well as the other antitrust laws.”

Hearst invested in MediaNews as part of a complex deal that helped finance the MediaNews purchase of the Contra Costa Times, Monterey County Herald and San Jose Mercury News last year. Both publishers are privately held.