I think they're confusing "compensation" for a refund of the difference between business and economy class. "Compensation" usually refers to additional monetary award for things like "inconvenience", or not being seated together which people frequently try to get from airlines. You should pursue a refund of the fare difference ( if there is one). Tariffs must be filed with the U.S. Dept of Transportation for flights to/from the U.S. and you cannot be charged a business class fare if you didn't sit in the business class cabin. European countries have stricter regulations, so make sure you get the refund you're entitled to.
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