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The Merge command may cause ArcMap to fail if one or more of the features to be merged have inconsistent geometry.
Features may contain inconsistent shapes when constructed programmatically. When the Merge command tries to combine inconsistent shapes, it may cause ArcMap to exit.
If the data is in a shapefile, you can use the 'Export and Clean Shapefile' developer sample to correct any features with inconsistent geometry. You can download this sample from the ArcObjects Online site. Click the link in Related Information and do a Quick Search.