Bcos it is unclear. Did the two companies merge for the purpose of controlling 15% or did they form a company that will actually control 15% of the gasoline sales?

B states that better.

And just a note, "why is exactly A" is WRONG. You say "Why exactly is A". (I am not sure, in written language, if exactly itself is required.)

aspirant2011 wrote:The two oil companies agreed to merge their refining and marketing operations in the Midwest and the West, forming a new company for controlling nearly fifteen percent of the nation's gasoline sales.

(A) forming a new company for controlling
(B) forming a new company that would control
(C) which would form a new company that controlled
(D) which formed a new company for controlling
(E) which formed a new company that would control

[spoiler]OA: Why is exactly A wrong???[/spoiler]

I think "meaning" is major issue here. See, u form something to control...infinitive implies intention while -ing form implies consequence. so saying, forming a new company for controlling seems bit lousy and incorrect.

Op B is correct because when we discuss a future event in reference from some past event, we use WOULD.

thanks a lot guys and vineeshp I would definitely keep in mind about exactly is

Final solution at one place:

Important: The purpose of this post (and all the other posts by me) is to give a complete solution to all GMAT-Prep Verbal questions at one place. Sometimes students have to wade through dozens of posts to get to the final answer. My posts will give one complete and crisp solution required to arrive at the correct answer by eliminating the wrong one. Some of the content in these posts may have been taken from various other sources (discussion forums).

The two oil companies agreed to merge their refining and marketing operations in the Midwest and the West, forming a new company for controlling nearly fifteen percent of the nation's gasoline sales.
(A) forming a new company for controlling
(B) forming a new company that would control
(C) which would form a new company that controlled
(D) which formed a new company for controlling
(E) which formed a new company that would control

In this case, you must understand that C, D, and E cannot be the answers as the word 'which' cannot refer to a specific word as given in the sentence. The word "Which" intends to refer to the entire clause or to the merger (noun) ... but there is no noun to which the word 'which' can directly refer as 'merge' is a verb.

The second clause is a result of the first... in all cause-effect relationships, the GMAT prefers the -ING form of the verb after the comma for the effect part.

Also, this ING form is applicable when one of the following is correct:

The second action is a result / effect / offshoot of the first; ... Cause and effect.
The second action is a part of the first and not a separate action;
The second action is dependent on the first;
The second action is sub-ordinate to the first;
The second action is embedded into the first action.
The second action can't happen without the first action independently
The second action explanation (how / why the first action happens) of the first action ... etc.

WE USE the second verb in the -ING form...

Also, A is wrong for the wrong idiom. Whenever we intend to denote the purpose, intention, desire etc., "to + verb" is considered idiomatically correct. So, A can be eliminated because it uses the wrong idiom 'for controlling'.

B is the best choice. In B, the use of the word 'would' is completely justified as it is used for a future event when viewed with respect to the past.

B: Correct

It is a merger.With this process, two similar companies combined and will form a new company with the new name.After the merger, if its size becomes big, then it is obvious that it will control the large percentage of oil in the concerned sector. It may be 15% or more.The subject has been very well mentioned in Investmentbank.