Quoting mail from Hakon:
I believe the enclosed little document
brings out an underspecified aspect of collapsing margins. The
document contains two DIV which have backgrounds, but no padding,
border or margin. Each DIV contains a P element which has a 50px 
margin on each side. Since the vertical margins of the two P elements
are adjacent they will collapse so that the distance between them is
50px (note: NGLayout is not currently doing this properly!). The 
question is: what is the background color of the 50px margin?

(Suggested approach:)
     split into equal parts, ie. half of it is red (preferable the
     upper half :-) and the other half is blue. I can't think of cases
     where there will be more than two competing backgrounds

Paragraph inside DIV.one

Paragraph inside DIV.two