Sure, people can lie about their reasons for not wanting to do business with someone. It's an easy way out. But this company has chosen to pursue a more ethical path and make clear whom they wish to do business with and whom they do not. And the government is punishing them for that. Rather than encouraging dishonesty and punishing honesty I would prefer the government did the opposite.
It’s not a lie to say you are artistically not interested if you are not interested in that aspect of art.
And until the contract or order is signed, no manufacturer or service provider should have to state why they refuse to take the work or even consider it. That's an absurd burden.