It was revealed early this month that CM Telecom operators refused to relay messages referring to the religious sect, which is outlawed on the mainland.

An authority spokeswoman said the matter had been passed to the Justice Department.

'We have given the file to the department's lawyers for legal advice,' she said.

The spokeswoman hoped to have the department's recommendations by early next month and would make an announcement then.

Democratic Party legislator and Legco security panel chairman James To Kun-sun said there should be at least a symbolic fine to show that the practice was unacceptable.

'There seemed to be a breach of licensing conditions,' he said.

'If nothing happened to the company, that would send the wrong signal.' CM Telecom International runs its mainland operations in a joint partnership with the state-owned China Motion Telecom Development and its call centres servicing Hong Kong clients are located across the border.

After a public outcry, the company, which is separately listed in Hong Kong, said poor radio reception and misinformed paging operators were to blame.

It did not return calls but in an earlier statement, the company promised no more censorship within SAR borders.

However, it insisted it must follow mainland laws and may exercise censorship with customers outside Hong Kong - a stand supported by the Telecommunications Authority.

A Falun Gong spokesman in Hong Kong, Kan Hung-chung, did not blame the company, saying mainland authorities placed it in this position because of the state's crackdown on the sect.