diff -r a150173da1c1 -r f1c9fafcbf46 mercurial/filemerge.py
--- a/mercurial/filemerge.py	Sun Dec 18 01:46:39 2016 +0530
+++ b/mercurial/filemerge.py	Sun Dec 18 01:54:36 2016 +0530
@@ -16,6 +16,7 @@
 from .node import nullid, short
 
 from . import (
+    encoding,
     error,
     formatter,
     match,
@@ -165,7 +166,7 @@
                 return (force, force)
 
     # HGMERGE takes next precedence
-    hgmerge = os.environ.get("HGMERGE")
+    hgmerge = encoding.environ.get("HGMERGE")
     if hgmerge:
         if changedelete and not supportscd(hgmerge):
             return ":prompt", None