Pillar One - Amount B

Appendix A – Relevant benchmarking search criteria

This Appendix describes the relevant benchmarking search criteria applied for the purposes of identifying companies involved in baseline marketing and distribution activities and relied upon to establish the global dataset which in part forms the basis for the approximation of arm’s length results under the simplified and streamlined approach.

Database filtering

Moody’s BvD Orbis database1 was used for the initial research of defining relevant benchmarking search criteria and only the following criteria were considered initially.

1. Active companies

2. Companies with primary NACE codes 45 - Wholesale and retail trade and repair of motor vehicles and motorcycles and 46 - Wholesale trade except of motor vehicles and motorcycles2

3. Companies with consolidated accounts, or unconsolidated only where the company is known to own less than 50% of any subsidiaries

4. Companies with no shareholders with ownership of more than 50% of the shares of the company

5. Companies with operating revenue and EBIT data available for 2017, 2018 and 2019

6. Companies with operating revenue average of at least EUR 2 million for 5 years (2015-2019)

7. Companies with a website address

8. Companies with business overview information available in the database

9. Excluding companies with a research and development to sales ratio of more than 3%3

Manual review of company descriptions

After the filtering described above, a manual review of the companies was performed.

This review aimed at rejecting from the final dataset any companies undertaking more than baseline wholesale marketing and distribution activities based on scoping criteria outlined in Section 2.

Initially, keyword searches were used to make rejections of companies, and then manually reviewed the companies in the dataset using only the descriptive information on businesses activities provided in the database.

This review comprised -

• Rejection of companies with the following terms in their business overview:

  • “design and manufactur”,

  • “financ”,

  • “insurance”,

  • “manufacture “,

  • “research”, “software d” and “system integrat”.

• Rejection of all companies that do not describe wholesale distribution as their main activity.

• Rejection of companies which describe any development, research or manufacturing activity, or more than minority or ancillary levels of additional activities such as retail, repairs and maintenance, and other services.

Quantitative review of company data

Companies reporting a 5-year weighted average of intangible fixed assets to sales higher than 1% were rejected.

Of companies reporting a figure for research and development expenses those reporting a 5 year weighted average of R&D over sales of more than 0% were rejected.

Companies reporting losses in 3, 4 or 5 of the 5 years considered in this analysis were rejected as persistent loss makers.

Application of the commodities exemption

Companies remaining in the dataset have been subject to further high-level qualitative checks of company website and internet information to identify the products being distributed. Where a company is distributing products which meet the definition of commodity in this guidance, that company has been removed from the data set in line with the scoping exemption for commodities.

Notes

← 1.  There are database license restrictions associated with the use and dissemination of detailed data and company information.

← 2.  Noting further refinements through the qualitative review outlined in the next section.

← 3.  This is an initial database search criteria, later refined through the manual rejection of companies described as carrying out research and development activities in their business descriptions and further quantitative filtering described below.