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representative of an arm’s-length rate than the 2-percent rate
used by DHL and DHLI. Our decision is based on the comparables
used by respondent’s expert and our holding that less of the
intangible value resides in the trademark and that the value must
therefore reside in other assets and intangibles. As advocated
by petitioners, that value should reside in the ability to
deliver packages efficiently and effectively. We agree that the
know-how and operating ability constituted an important
intangible aspect that was, in some part, responsible for the
success of the DHL network. Accordingly, the use of those
valuable intangible assets would warrant a fair return. A higher
markup was not advocated by either party in connection with the
type of reciprocal agreement as the one between DHL and DHLI. In
that regard, petitioners’ expert used, among others, a 15-percent
markup in the context of a total cost reimbursement environment,
which, as we have explained, does not represent the transaction
under consideration and does not represent an arm’s-length
arrangement in the context of these cases. Accordingly, we
sustain respondent’s trial position for cost plus 4 percent on
imbalances and transfers for 1979 through 1992.
D. Network Fee
Respondent determined that one-half of the network fees that
DHLI collected from agents and subsidiary operating companies
should be allocated under section 482 to DHL. Based on
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