Why Mercurial doesn't need “recursive merge strategy”?

AFAIK git's default merge strategy is "recursive" which means when more than one "common ancestor" ends up being a "good candidate", git will merge them and create a new "virtual common ancestor" for the contributors. It basically helps solving situations where files were already merged and it avoids merging them again or coming up with incorrect merge contributors.

My question is: if Mercurial doesn't use "recursive", how does it handle the same situation?

Thanks