This sounds like a description of what happens when you try to merge a lead and a contact using a Marketo flow step.
Marketo will de-dupe leads that enter its own database based on email address, but will allow you to create dupes if they originate in SFDC.
I have never experienced Marketo automatically converting or merging SFDC records -- you would have to identify duplicates and initiate the action via a Lead Action or Smart Campaign Flow Step.