The whole scheme was dreamt up after years of some airlines abusing their position. Some of the less customer-centric airlines continued to abuse their position, and it's come to this, with an overly strict set or rules applied to airlines.
Ideally the whole scheme should have greater levels of subtlety, so that only the most serious of abuse is punished severely, while minor problems lead to small levels of compensation. Unfortunately, such a scheme would be tremendously complicated and costly to administer.
What to do about it ? Answers on a postcard please...