Most guys blow much of their potential altitude advantage on a vertical merge by continuing to pull Gs all the way through the merge, as though they were performing a half loop.
The trick to maximising your altitude advantage is this:  when you merge pull gently into about a 20-30 degree climb ... hold that straight climb at 1g until your airspeed decays to about 200mph, and only THEN commence your 2g pullup to your immelmann turn.
Personally, I hate the vertical merge turn.  There is a real tradeoff there between altitude and airspeed.  Go for max altitude, and when you get to the top you will be right on stalling speed.  Go for a fast vertical reversal, and you will be lower than the other guy but perhaps with a tad more airspeed to maneuver.
I've been experimenting lately with doing a (gasp, horror) horizontal turn into the merge.  I know that's heresy to the E fighting crowd, but I believe that if done right it offers considerable advantages over the vertical merge, particularly if your opponent does decide to go vertical.  A wide, low G horizontal turn will prevent your opponent being able to easily convert his vertical merge to angles.  Often he will see you in that flat turn, deduce you are a complete dweeb, and dive in for a quick kill.  But since you have maintained your 300mph throughout your flat turn you can NOW go vertical and force his vertical overshoot, handing you 
both a positional and energy advantage on a platter.
An unconventional move certainly, but one which is showing promise  

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Jekyll
9./JG 54 "Grünherz"
Aces High Training Corps