Merle is a coat pattern caused by a dominant mutation in a pigmentation
gene called SILV. The mutation (an insertion of repetitive, mobile DNA)
causes dilution of the base fur color and often blue eye color. Merle
affects all coat colors, but is more apparent in dogs with darker
colored coats (e.g., black) than those with lighter-colored coats
(e.g., sable). Coat color is determined by another gene. Because of the
type of mutation that causes merle, merling is random and
characteristics such as the size and number of colored patches and eye
color can not be predicted. Dr. Leigh Anne Clark TX A & M University  

Retrotransposon insertion in SILV is responsible for merle patterning of the domestic dog, by Leigh Anne Clark et al. was published in the National Academy of Sciences PNAS

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