It is not unusual for groups booking large blocks of rooms to receive complementary rooms. In fact, many years ago, I actually shared a comp room at the DC with a visiting pioneer brother from another country. I'm not sure how I got that lucky.But, yes, they most certainly do receive free rooms based on occupancy.
And there's nothing wrong with that. That's standard procedure for lots of companies.
What's not okay is "forcing" people to use only the listed hotels. If I decide that the hotels on the list are not up to my standards and I'm spending my money to secure lodging, I'll stay where I damn well please and no amount of dirty looks is going to change that.