http://talk.collegeconfidential.com/pre-med-topics/2074436-some-colleges-have-grade-distribution-information-available-by-course.html has links to grade distribution information at various colleges. UCB grade distributions are not “insanely low”, and http://www.gradeinflation.com/Ucberkeley.html indicates that there has been some grade inflation over the years, just like at many other colleges listed at the bottom of http://www.gradeinflation.com/ .
Departments prioritize enrollment for students who most need the course (e.g. students in the major, or undeclared frosh/soph students for lower level courses in L&S subjects), and the multiphase scheduling system allows all students to register for part of their schedule first (so that students can get their most important courses first before other students looking for out-of-major electives fill them up).