RAT5 absolutely right, but this regulation is designed to "punish" airlines for their overbooking and cancellation practices. And if you sue someone it is for actual proven loses, not for a fixed punitive compensation amount.
The EC wanted to ban overbooking until it was carefully explained to them the very large numbers of passengers that benefit from the practices. So they agreed that punitive compensation amounts were to apply to change the airline's behaviour. Funny, there has been no measurable change in the rate of involuntary denied boarding.