--- a/lisp/vc/smerge-mode.el
+++ b/lisp/vc/smerge-mode.el
@@ -44,6 +44,7 @@
 ;;; Code:
 
 (eval-when-compile (require 'cl-lib))
+(require 'diff)				; for diff-check-labels
 (require 'diff-mode)                    ;For diff-auto-refine-mode.
 (require 'newcomment)
 
@@ -1162,10 +1163,13 @@ smerge-diff (n1 n2)
 	    (erase-buffer)
 	    (let ((status
 		   (apply 'call-process diff-command nil t nil
-			  (append smerge-diff-switches
-				  (list "-L" (concat name1 "/" file)
-					"-L" (concat name2 "/" file)
-					file1 file2)))))
+			  (nconc (and (diff-check-labels)
+				      (list "--label"
+					    (concat name1 "/" file)
+					    "--label"
+					    (concat name2 "/" file)))
+				 smerge-diff-switches)
+			  file1 file2)))))
 	      (if (eq status 0) (insert "No differences found.\n"))))
 	  (goto-char (point-min))
 	  (diff-mode)