What exactly do you mean by "Merge" layers?
There is a Merge Layers command as well as a Flatten Layers, and Combine into new Top Layer command in the Layers Panel menu. Those may or may not work for what you want. None of them work like Photoshop really because Illustrator is a different animal.
What I mean is can you merge different layers into one; similar to the way it can be done in Photoshop.
The merge layer command seems to only work if layers are overlapped.
Let's say I want to create a page backround by creating 4 individual "panels". I then butt them up against one another and I want to merge them into one layer.
Illustrator simply does not work that way. It's object based so every object is on it's own basic layer.
Essentially the Layers Panel shows layers and objects so you have layers, sublayers, and objects. If you don't what to see the objects in the Layers Panel choose the Panel Options from the Layers Panel and check the "Only show Top Layers" option.
Thanks for your help!!
Choose both layers (click on one and hold down the CTL key to click on the second), then go to the layers drop down menu, and choose 'Merge Selected'.
Choose both layers as above, go to layers drop down menu, and choose 'Collect in New Layer'.
Not sure this is what you're wanting to do .... if not, there may be another way.