The rule states that any contact with the head in "reckless tackles" will be penalised with at least a yellow card.
Pro12 players from Ulster, Scarlets and Ospreys were sin-binned this weekend.
Wales' Davies said: "It's a brilliant directive but it's not being refereed properly. They've gone to the letter of the law, and it's gone crazy."
The former union and league player wants referees to adopt a common sense approach, adding: "You know a high shot, you know a cheap shot, you know a fair shot and referees have got to understand the difference as well."
In September 2015, World Rugby's chief medical officer Martin Raftery told the BBC that the game's rules may have to change to reduce concussions.
On Friday, Ulster's Sean Ready was sin-binned for a tackle on Scarlets scrum-half Aled Davies in their 16-13 defeat in Llanelli.
