Google won't penalise you with a PR0 for having duplicated content, but it will drop you out of the SERPs in favour of the "strongest" page. Sometimes that means that merchants will get knocked out by affiliates, of course.
This has been the case for a while. There are a few ways to mitigate this problem...
[list=1][*]Write your own content, or manually rephrase the content from the merchant. This can be a pain if you have lots of pages.[*]List multiple themed products on one page using the merchant's descriptions, in a fairly random order. This will (should/might) look like unique content to Google so that you should appear in the SERPs.[*]Anything you can do to customise a datafeed site will increase it's odds of being listed[/list=1]
This move by Google is a pretty obvious one - I guess as affiliates we just need to continue to adapt.
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