The compensation must be paid in cash - or in travel vouchers if you prefer - but it should not exceed the price of the fare paid.
This one is the stinger if on a codeshare add-on or some kind of Europe Coupon etc, as the fare paid on a short leg might run to only change, versus the It'l ticket.
Not Europe (!!) but was flying
Lan Chile last month from Puntas Arenas to Santiago and they were 7 oversold. Their offer was next flight and TWO round trip tickets anywhere in Chile (inc. Easter Island) and hotel and meals overnight. Darn nice offer.
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Glen ~