Using the exact same category folder name in the ISO and GAME folders does not merge (e.g. CAT_01Action Game).
From checking the readme, I assumed this was happening in ME, but it is also happening in Adrenaline.
I would like to confirm if this is a specification or an unfixable bug.
As far as I have been able to find in readme and web searches, I have not been able to find any information on whether or not categories are merged.