Merge branch 'blackst0ne-squash-and-merge-in-gitlab-core-ce' into 'master'

Resolve "Squash and merge in GitLab Core (CE)"

Closes #34591

See merge request gitlab-org/gitlab-ce!18956

12 files changed, 497 insertions, 21 deletions

diff --git a/spec/controllers/projects/merge_requests_controller_spec.rb b/spec/controllers/projects/merge_requests_controller_spec.rb
index d3042be9e8b..5efaaf2bb3a 100644
--- a/spec/controllers/projects/merge_requests_controller_spec.rb
+++ b/spec/controllers/projects/merge_requests_controller_spec.rb
@@ -275,6 +275,7 @@ describe Projects::MergeRequestsController do
         namespace_id: project.namespace,
         project_id: project,
         id: merge_request.iid,
+        squash: false,
         format: 'json'
       }
     end
@@ -315,8 +316,8 @@ describe Projects::MergeRequestsController do
     end
 
     context 'when the sha parameter matches the source SHA' do
-      def merge_with_sha
-        post :merge, base_params.merge(sha: merge_request.diff_head_sha)
+      def merge_with_sha(params = {})
+        post :merge, base_params.merge(sha: merge_request.diff_head_sha).merge(params)
       end
 
       it 'returns :success' do
@@ -331,6 +332,24 @@ describe Projects::MergeRequestsController do
         merge_with_sha
       end
 
+      context 'when squash is passed as 1' do
+        it 'updates the squash attribute on the MR to true' do
+          merge_request.update(squash: false)
+          merge_with_sha(squash: '1')
+
+          expect(merge_request.reload.squash).to be_truthy
+        end
+      end
+
+      context 'when squash is passed as 0' do
+        it 'updates the squash attribute on the MR to false' do
+          merge_request.update(squash: true)
+          merge_with_sha(squash: '0')
+
+          expect(merge_request.reload.squash).to be_falsey
+        end
+      end
+
       context 'when the pipeline succeeds is passed' do
         let!(:head_pipeline) do
           create(:ci_empty_pipeline, project: project, sha: merge_request.diff_head_sha, ref: merge_request.source_branch, head_pipeline_of: merge_request)
diff --git a/spec/features/merge_requests/user_squashes_merge_request_spec.rb b/spec/features/merge_requests/user_squashes_merge_request_spec.rb
new file mode 100644
index 00000000000..6c952791591
--- /dev/null
+++ b/spec/features/merge_requests/user_squashes_merge_request_spec.rb
@@ -0,0 +1,124 @@
+require 'spec_helper'
+
+feature 'User squashes a merge request', :js do
+  let(:user) { create(:user) }
+  let(:project) { create(:project, :repository) }
+  let(:source_branch) { 'csv' }
+
+  let!(:original_head) { project.repository.commit('master') }
+
+  shared_examples 'squash' do
+    it 'squashes the commits into a single commit, and adds a merge commit' do
+      expect(page).to have_content('Merged')
+
+      latest_master_commits = project.repository.commits_between(original_head.sha, 'master').map(&:raw)
+
+      squash_commit = an_object_having_attributes(sha: a_string_matching(/\h{40}/),
+                                                  message: "Csv\n",
+                                                  author_name: user.name,
+                                                  committer_name: user.name)
+
+      merge_commit = an_object_having_attributes(sha: a_string_matching(/\h{40}/),
+                                                 message: a_string_starting_with("Merge branch 'csv' into 'master'"),
+                                                 author_name: user.name,
+                                                 committer_name: user.name)
+
+      expect(project.repository).not_to be_merged_to_root_ref(source_branch)
+      expect(latest_master_commits).to match([squash_commit, merge_commit])
+    end
+  end
+
+  shared_examples 'no squash' do
+    it 'accepts the merge request without squashing' do
+      expect(page).to have_content('Merged')
+      expect(project.repository).to be_merged_to_root_ref(source_branch)
+    end
+  end
+
+  def accept_mr
+    expect(page).to have_button('Merge')
+
+    uncheck 'Remove source branch'
+    click_on 'Merge'
+  end
+
+  before do
+    # Prevent source branch from being removed so we can use be_merged_to_root_ref
+    # method to check if squash was performed or not
+    allow_any_instance_of(MergeRequest).to receive(:force_remove_source_branch?).and_return(false)
+    project.add_master(user)
+
+    sign_in user
+  end
+
+  context 'when the MR has only one commit' do
+    before do
+      merge_request = create(:merge_request, source_project: project, target_project: project, source_branch: 'master', target_branch: 'branch-merged')
+
+      visit project_merge_request_path(project, merge_request)
+    end
+
+    it 'does not show the squash checkbox' do
+      expect(page).not_to have_field('squash')
+    end
+  end
+
+  context 'when squash is enabled on merge request creation' do
+    before do
+      visit project_new_merge_request_path(project, merge_request: { target_branch: 'master', source_branch: source_branch })
+      check 'merge_request[squash]'
+      click_on 'Submit merge request'
+      wait_for_requests
+    end
+
+    it 'shows the squash checkbox as checked' do
+      expect(page).to have_checked_field('squash')
+    end
+
+    context 'when accepting with squash checked' do
+      before do
+        accept_mr
+      end
+
+      include_examples 'squash'
+    end
+
+    context 'when accepting and unchecking squash' do
+      before do
+        uncheck 'squash'
+        accept_mr
+      end
+
+      include_examples 'no squash'
+    end
+  end
+
+  context 'when squash is not enabled on merge request creation' do
+    before do
+      visit project_new_merge_request_path(project, merge_request: { target_branch: 'master', source_branch: source_branch })
+      click_on 'Submit merge request'
+      wait_for_requests
+    end
+
+    it 'shows the squash checkbox as unchecked' do
+      expect(page).to have_unchecked_field('squash')
+    end
+
+    context 'when accepting and checking squash' do
+      before do
+        check 'squash'
+        accept_mr
+      end
+
+      include_examples 'squash'
+    end
+
+    context 'when accepting with squash unchecked' do
+      before do
+        accept_mr
+      end
+
+      include_examples 'no squash'
+    end
+  end
+end
diff --git a/spec/fixtures/api/schemas/entities/merge_request_widget.json b/spec/fixtures/api/schemas/entities/merge_request_widget.json
index 233102c4314..7be8c9e3e67 100644
--- a/spec/fixtures/api/schemas/entities/merge_request_widget.json
+++ b/spec/fixtures/api/schemas/entities/merge_request_widget.json
@@ -112,7 +112,8 @@
     "rebase_commit_sha": { "type": ["string", "null"] },
     "rebase_in_progress": { "type": "boolean" },
     "can_push_to_source_branch": { "type": "boolean" },
-    "rebase_path": { "type": ["string", "null"] }
+    "rebase_path": { "type": ["string", "null"] },
+    "squash": { "type": "boolean" }
   },
   "additionalProperties": false
 }
diff --git a/spec/fixtures/api/schemas/public_api/v3/merge_requests.json b/spec/fixtures/api/schemas/public_api/v3/merge_requests.json
index b5c74bcc26e..9af7a8c9f4f 100644
--- a/spec/fixtures/api/schemas/public_api/v3/merge_requests.json
+++ b/spec/fixtures/api/schemas/public_api/v3/merge_requests.json
@@ -73,7 +73,8 @@
       "should_remove_source_branch": { "type": ["boolean", "null"] },
       "force_remove_source_branch": { "type": ["boolean", "null"] },
       "web_url": { "type": "uri" },
-      "subscribed": { "type": ["boolean"] }
+      "subscribed": { "type": ["boolean"] },
+      "squash": { "type": "boolean" }
     },
     "required": [
       "id", "iid", "project_id", "title", "description",
@@ -83,7 +84,7 @@
       "labels", "work_in_progress", "milestone", "merge_when_build_succeeds",
       "merge_status", "sha", "merge_commit_sha", "user_notes_count",
       "should_remove_source_branch", "force_remove_source_branch",
-      "web_url", "subscribed"
+      "web_url", "subscribed", "squash"
     ],
     "additionalProperties": false
   }
diff --git a/spec/fixtures/api/schemas/public_api/v4/merge_requests.json b/spec/fixtures/api/schemas/public_api/v4/merge_requests.json
index 0dc2eabec5d..f97461ce9cc 100644
--- a/spec/fixtures/api/schemas/public_api/v4/merge_requests.json
+++ b/spec/fixtures/api/schemas/public_api/v4/merge_requests.json
@@ -75,6 +75,7 @@
       "force_remove_source_branch": { "type": ["boolean", "null"] },
       "discussion_locked": { "type": ["boolean", "null"] },
       "web_url": { "type": "uri" },
+      "squash": { "type": "boolean" },
       "time_stats": {
         "time_estimate": { "type": "integer" },
         "total_time_spent": { "type": "integer" },
@@ -91,7 +92,7 @@
       "labels", "work_in_progress", "milestone", "merge_when_pipeline_succeeds",
       "merge_status", "sha", "merge_commit_sha", "user_notes_count",
       "should_remove_source_branch", "force_remove_source_branch",
-      "web_url"
+      "web_url", "squash"
     ],
     "additionalProperties": false
   }
diff --git a/spec/lib/gitlab/import_export/safe_model_attributes.yml b/spec/lib/gitlab/import_export/safe_model_attributes.yml
index 62da967cf96..3d5271cd030 100644
--- a/spec/lib/gitlab/import_export/safe_model_attributes.yml
+++ b/spec/lib/gitlab/import_export/safe_model_attributes.yml
@@ -165,6 +165,7 @@ MergeRequest:
 - approvals_before_merge
 - rebase_commit_sha
 - time_estimate
+- squash
 - last_edited_at
 - last_edited_by_id
 - head_pipeline_id
diff --git a/spec/models/merge_request_spec.rb b/spec/models/merge_request_spec.rb
index 92e33a64d26..9ffa91fc265 100644
--- a/spec/models/merge_request_spec.rb
+++ b/spec/models/merge_request_spec.rb
@@ -14,6 +14,65 @@ describe MergeRequest do
     it { is_expected.to have_many(:merge_request_diffs) }
   end
 
+  describe '#squash_in_progress?' do
+    shared_examples 'checking whether a squash is in progress' do
+      let(:repo_path) { subject.source_project.repository.path }
+      let(:squash_path) { File.join(repo_path, "gitlab-worktree", "squash-#{subject.id}") }
+
+      before do
+        system(*%W(#{Gitlab.config.git.bin_path} -C #{repo_path} worktree add --detach #{squash_path} master))
+      end
+
+      it 'returns true when there is a current squash directory' do
+        expect(subject.squash_in_progress?).to be_truthy
+      end
+
+      it 'returns false when there is no squash directory' do
+        FileUtils.rm_rf(squash_path)
+
+        expect(subject.squash_in_progress?).to be_falsey
+      end
+
+      it 'returns false when the squash directory has expired' do
+        time = 20.minutes.ago.to_time
+        File.utime(time, time, squash_path)
+
+        expect(subject.squash_in_progress?).to be_falsey
+      end
+
+      it 'returns false when the source project has been removed' do
+        allow(subject).to receive(:source_project).and_return(nil)
+
+        expect(subject.squash_in_progress?).to be_falsey
+      end
+    end
+
+    context 'when Gitaly squash_in_progress is enabled' do
+      it_behaves_like 'checking whether a squash is in progress'
+    end
+
+    context 'when Gitaly squash_in_progress is disabled', :disable_gitaly do
+      it_behaves_like 'checking whether a squash is in progress'
+    end
+  end
+
+  describe '#squash?' do
+    let(:merge_request) { build(:merge_request, squash: squash) }
+    subject { merge_request.squash? }
+
+    context 'disabled in database' do
+      let(:squash) { false }
+
+      it { is_expected.to be_falsy }
+    end
+
+    context 'enabled in database' do
+      let(:squash) { true }
+
+      it { is_expected.to be_truthy }
+    end
+  end
+
   describe 'modules' do
     subject { described_class }
 
diff --git a/spec/requests/api/merge_requests_spec.rb b/spec/requests/api/merge_requests_spec.rb
index 1eeeb4f1045..6b91e48ae6a 100644
--- a/spec/requests/api/merge_requests_spec.rb
+++ b/spec/requests/api/merge_requests_spec.rb
@@ -263,6 +263,7 @@ describe API::MergeRequests do
         expect(json_response.first['sha']).to eq(merge_request_merged.diff_head_sha)
         expect(json_response.first['merge_commit_sha']).not_to be_nil
         expect(json_response.first['merge_commit_sha']).to eq(merge_request_merged.merge_commit_sha)
+        expect(json_response.first['squash']).to eq(merge_request_merged.squash)
       end
 
       it "returns an array of all merge_requests using simple mode" do
@@ -671,12 +672,14 @@ describe API::MergeRequests do
              target_branch: 'master',
              author: user,
              labels: 'label, label2',
-             milestone_id: milestone.id
+             milestone_id: milestone.id,
+             squash: true
 
         expect(response).to have_gitlab_http_status(201)
         expect(json_response['title']).to eq('Test merge_request')
         expect(json_response['labels']).to eq(%w(label label2))
         expect(json_response['milestone']['id']).to eq(milestone.id)
+        expect(json_response['squash']).to be_truthy
         expect(json_response['force_remove_source_branch']).to be_falsy
       end
 
@@ -965,6 +968,14 @@ describe API::MergeRequests do
       expect(response).to have_gitlab_http_status(200)
     end
 
+    it "updates the MR's squash attribute" do
+      expect do
+        put api("/projects/#{project.id}/merge_requests/#{merge_request.iid}/merge", user), squash: true
+      end.to change { merge_request.reload.squash }
+
+      expect(response).to have_gitlab_http_status(200)
+    end
+
     it "enables merge when pipeline succeeds if the pipeline is active" do
       allow_any_instance_of(MergeRequest).to receive(:head_pipeline).and_return(pipeline)
       allow(pipeline).to receive(:active?).and_return(true)
@@ -1029,6 +1040,13 @@ describe API::MergeRequests do
       expect(json_response['milestone']['id']).to eq(milestone.id)
     end
 
+    it "updates squash and returns merge_request" do
+      put api("/projects/#{project.id}/merge_requests/#{merge_request.iid}", user), squash: true
+
+      expect(response).to have_gitlab_http_status(200)
+      expect(json_response['squash']).to be_truthy
+    end
+
     it "returns merge_request with renamed target_branch" do
       put api("/projects/#{project.id}/merge_requests/#{merge_request.iid}", user), target_branch: "wiki"
       expect(response).to have_gitlab_http_status(200)
diff --git a/spec/requests/api/v3/merge_requests_spec.rb b/spec/requests/api/v3/merge_requests_spec.rb
index be70cb24dce..79a16fbd1b0 100644
--- a/spec/requests/api/v3/merge_requests_spec.rb
+++ b/spec/requests/api/v3/merge_requests_spec.rb
@@ -40,6 +40,7 @@ describe API::MergeRequests do
         expect(json_response.first['sha']).to eq(merge_request_merged.diff_head_sha)
         expect(json_response.first['merge_commit_sha']).not_to be_nil
         expect(json_response.first['merge_commit_sha']).to eq(merge_request_merged.merge_commit_sha)
+        expect(json_response.first['squash']).to eq(merge_request_merged.squash)
       end
 
       it "returns an array of all merge_requests" do
@@ -241,13 +242,15 @@ describe API::MergeRequests do
              author: user,
              labels: 'label, label2',
              milestone_id: milestone.id,
-             remove_source_branch: true
+             remove_source_branch: true,
+             squash: true
 
         expect(response).to have_gitlab_http_status(201)
         expect(json_response['title']).to eq('Test merge_request')
         expect(json_response['labels']).to eq(%w(label label2))
         expect(json_response['milestone']['id']).to eq(milestone.id)
         expect(json_response['force_remove_source_branch']).to be_truthy
+        expect(json_response['squash']).to be_truthy
       end
 
       it "returns 422 when source_branch equals target_branch" do
@@ -489,6 +492,14 @@ describe API::MergeRequests do
       expect(response).to have_gitlab_http_status(200)
     end
 
+    it "updates the MR's squash attribute" do
+      expect do
+        put v3_api("/projects/#{project.id}/merge_requests/#{merge_request.id}/merge", user), squash: true
+      end.to change { merge_request.reload.squash }
+
+      expect(response).to have_gitlab_http_status(200)
+    end
+
     it "enables merge when pipeline succeeds if the pipeline is active" do
       allow_any_instance_of(MergeRequest).to receive(:head_pipeline).and_return(pipeline)
       allow(pipeline).to receive(:active?).and_return(true)
@@ -529,6 +540,13 @@ describe API::MergeRequests do
       expect(json_response['milestone']['id']).to eq(milestone.id)
     end
 
+    it "updates squash and returns merge_request" do
+      put v3_api("/projects/#{project.id}/merge_requests/#{merge_request.id}", user), squash: true
+
+      expect(response).to have_gitlab_http_status(200)
+      expect(json_response['squash']).to be_truthy
+    end
+
     it "returns merge_request with renamed target_branch" do
       put v3_api("/projects/#{project.id}/merge_requests/#{merge_request.id}", user), target_branch: "wiki"
       expect(response).to have_gitlab_http_status(200)
diff --git a/spec/services/merge_requests/merge_service_spec.rb b/spec/services/merge_requests/merge_service_spec.rb
index e8568bf8bb3..dc30a9bccc1 100644
--- a/spec/services/merge_requests/merge_service_spec.rb
+++ b/spec/services/merge_requests/merge_service_spec.rb
@@ -249,24 +249,58 @@ describe MergeRequests::MergeService do
         expect(Rails.logger).to have_received(:error).with(a_string_matching(error_message))
       end
 
-      context "when fast-forward merge is not allowed" do
+      context 'when squashing' do
         before do
-          allow_any_instance_of(Repository).to receive(:ancestor?).and_return(nil)
+          merge_request.update!(source_branch: 'master', target_branch: 'feature')
         end
 
-        %w(semi-linear ff).each do |merge_method|
-          it "logs and saves error if merge is #{merge_method} only" do
-            merge_method = 'rebase_merge' if merge_method == 'semi-linear'
-            merge_request.project.update(merge_method: merge_method)
-            error_message = 'Only fast-forward merge is allowed for your project. Please update your source branch'
-            allow(service).to receive(:execute_hooks)
+        it 'logs and saves error if there is an error when squashing' do
+          error_message = 'Failed to squash. Should be done manually'
 
-            service.execute(merge_request)
+          allow_any_instance_of(MergeRequests::SquashService).to receive(:squash).and_return(nil)
+          merge_request.update(squash: true)
+
+          service.execute(merge_request)
+
+          expect(merge_request).to be_open
+          expect(merge_request.merge_commit_sha).to be_nil
+          expect(merge_request.merge_error).to include(error_message)
+          expect(Rails.logger).to have_received(:error).with(a_string_matching(error_message))
+        end
+
+        it 'logs and saves error if there is a squash in progress' do
+          error_message = 'another squash is already in progress'
+
+          allow_any_instance_of(MergeRequest).to receive(:squash_in_progress?).and_return(true)
+          merge_request.update(squash: true)
+
+          service.execute(merge_request)
 
-            expect(merge_request).to be_open
-            expect(merge_request.merge_commit_sha).to be_nil
-            expect(merge_request.merge_error).to include(error_message)
-            expect(Rails.logger).to have_received(:error).with(a_string_matching(error_message))
+          expect(merge_request).to be_open
+          expect(merge_request.merge_commit_sha).to be_nil
+          expect(merge_request.merge_error).to include(error_message)
+          expect(Rails.logger).to have_received(:error).with(a_string_matching(error_message))
+        end
+
+        context "when fast-forward merge is not allowed" do
+          before do
+            allow_any_instance_of(Repository).to receive(:ancestor?).and_return(nil)
+          end
+
+          %w(semi-linear ff).each do |merge_method|
+            it "logs and saves error if merge is #{merge_method} only" do
+              merge_method = 'rebase_merge' if merge_method == 'semi-linear'
+              merge_request.project.update(merge_method: merge_method)
+              error_message = 'Only fast-forward merge is allowed for your project. Please update your source branch'
+              allow(service).to receive(:execute_hooks)
+
+              service.execute(merge_request)
+
+              expect(merge_request).to be_open
+              expect(merge_request.merge_commit_sha).to be_nil
+              expect(merge_request.merge_error).to include(error_message)
+              expect(Rails.logger).to have_received(:error).with(a_string_matching(error_message))
+            end
           end
         end
       end
diff --git a/spec/services/merge_requests/squash_service_spec.rb b/spec/services/merge_requests/squash_service_spec.rb
new file mode 100644
index 00000000000..bd884787425
--- /dev/null
+++ b/spec/services/merge_requests/squash_service_spec.rb
@@ -0,0 +1,199 @@
+require 'spec_helper'
+
+describe MergeRequests::SquashService do
+  let(:service) { described_class.new(project, user, {}) }
+  let(:user) { project.owner }
+  let(:project) { create(:project, :repository) }
+  let(:repository) { project.repository.raw }
+  let(:log_error) { "Failed to squash merge request #{merge_request.to_reference(full: true)}:" }
+  let(:squash_dir_path) do
+    File.join(Gitlab.config.shared.path, 'tmp/squash', repository.gl_repository, merge_request.id.to_s)
+  end
+  let(:merge_request_with_one_commit) do
+    create(:merge_request,
+           source_branch: 'feature', source_project: project,
+           target_branch: 'master', target_project: project)
+  end
+
+  let(:merge_request_with_only_new_files) do
+    create(:merge_request,
+           source_branch: 'video', source_project: project,
+           target_branch: 'master', target_project: project)
+  end
+
+  let(:merge_request_with_large_files) do
+    create(:merge_request,
+           source_branch: 'squash-large-files', source_project: project,
+           target_branch: 'master', target_project: project)
+  end
+
+  shared_examples 'the squash succeeds' do
+    it 'returns the squashed commit SHA' do
+      result = service.execute(merge_request)
+
+      expect(result).to match(status: :success, squash_sha: a_string_matching(/\h{40}/))
+      expect(result[:squash_sha]).not_to eq(merge_request.diff_head_sha)
+    end
+
+    it 'cleans up the temporary directory' do
+      service.execute(merge_request)
+
+      expect(File.exist?(squash_dir_path)).to be(false)
+    end
+
+    it 'does not keep the branch push event' do
+      expect { service.execute(merge_request) }.not_to change { Event.count }
+    end
+
+    context 'the squashed commit' do
+      let(:squash_sha) { service.execute(merge_request)[:squash_sha] }
+      let(:squash_commit) { project.repository.commit(squash_sha) }
+
+      it 'copies the author info and message from the merge request' do
+        expect(squash_commit.author_name).to eq(merge_request.author.name)
+        expect(squash_commit.author_email).to eq(merge_request.author.email)
+
+        # Commit messages have a trailing newline, but titles don't.
+        expect(squash_commit.message.chomp).to eq(merge_request.title)
+      end
+
+      it 'sets the current user as the committer' do
+        expect(squash_commit.committer_name).to eq(user.name.chomp('.'))
+        expect(squash_commit.committer_email).to eq(user.email)
+      end
+
+      it 'has the same diff as the merge request, but a different SHA' do
+        rugged = project.repository.rugged
+        mr_diff = rugged.diff(merge_request.diff_base_sha, merge_request.diff_head_sha)
+        squash_diff = rugged.diff(merge_request.diff_start_sha, squash_sha)
+
+        expect(squash_diff.patch.length).to eq(mr_diff.patch.length)
+        expect(squash_commit.sha).not_to eq(merge_request.diff_head_sha)
+      end
+    end
+  end
+
+  describe '#execute' do
+    context 'when there is only one commit in the merge request' do
+      it 'returns that commit SHA' do
+        result = service.execute(merge_request_with_one_commit)
+
+        expect(result).to match(status: :success, squash_sha: merge_request_with_one_commit.diff_head_sha)
+      end
+
+      it 'does not perform any git actions' do
+        expect(repository).not_to receive(:popen)
+
+        service.execute(merge_request_with_one_commit)
+      end
+    end
+
+    context 'when squashing only new files' do
+      let(:merge_request) { merge_request_with_only_new_files }
+
+      include_examples 'the squash succeeds'
+    end
+
+    context 'when squashing with files too large to display' do
+      let(:merge_request) { merge_request_with_large_files }
+
+      include_examples 'the squash succeeds'
+    end
+
+    context 'git errors' do
+      let(:merge_request) { merge_request_with_only_new_files }
+      let(:error) { 'A test error' }
+
+      context 'with gitaly enabled' do
+        before do
+          allow(repository.gitaly_operation_client).to receive(:user_squash)
+            .and_raise(Gitlab::Git::Repository::GitError, error)
+        end
+
+        it 'logs the stage and output' do
+          expect(service).to receive(:log_error).with(log_error)
+          expect(service).to receive(:log_error).with(error)
+
+          service.execute(merge_request)
+        end
+
+        it 'returns an error' do
+          expect(service.execute(merge_request)).to match(status: :error,
+                                                          message: a_string_including('squash'))
+        end
+      end
+
+      context 'with Gitaly disabled', :skip_gitaly_mock do
+        stages = {
+          'add worktree for squash' => 'worktree',
+          'configure sparse checkout' => 'config',
+          'get files in diff' => 'diff --name-only',
+          'check out target branch' => 'checkout',
+          'apply patch' => 'diff --binary',
+          'commit squashed changes' => 'commit',
+          'get SHA of squashed commit' => 'rev-parse'
+        }
+
+        stages.each do |stage, command|
+          context "when the #{stage} stage fails" do
+            before do
+              git_command = a_collection_containing_exactly(
+                a_string_starting_with("#{Gitlab.config.git.bin_path} #{command}")
+              ).or(
+                a_collection_starting_with([Gitlab.config.git.bin_path] + command.split)
+              )
+
+              allow(repository).to receive(:popen).and_return(['', 0])
+              allow(repository).to receive(:popen).with(git_command, anything, anything, anything).and_return([error, 1])
+            end
+
+            it 'logs the stage and output' do
+              expect(service).to receive(:log_error).with(log_error)
+              expect(service).to receive(:log_error).with(error)
+
+              service.execute(merge_request)
+            end
+
+            it 'returns an error' do
+              expect(service.execute(merge_request)).to match(status: :error,
+                                                              message: a_string_including('squash'))
+            end
+
+            it 'cleans up the temporary directory' do
+              expect(File.exist?(squash_dir_path)).to be(false)
+
+              service.execute(merge_request)
+            end
+          end
+        end
+      end
+    end
+
+    context 'when any other exception is thrown' do
+      let(:merge_request) { merge_request_with_only_new_files }
+      let(:error) { 'A test error' }
+
+      before do
+        allow(merge_request).to receive(:commits_count).and_raise(error)
+      end
+
+      it 'logs the MR reference and exception' do
+        expect(service).to receive(:log_error).with(a_string_including("#{project.full_path}#{merge_request.to_reference}"))
+        expect(service).to receive(:log_error).with(error)
+
+        service.execute(merge_request)
+      end
+
+      it 'returns an error' do
+        expect(service.execute(merge_request)).to match(status: :error,
+                                                        message: a_string_including('squash'))
+      end
+
+      it 'cleans up the temporary directory' do
+        service.execute(merge_request)
+
+        expect(File.exist?(squash_dir_path)).to be(false)
+      end
+    end
+  end
+end
diff --git a/spec/support/helpers/test_env.rb b/spec/support/helpers/test_env.rb
index 57aa07cf4fa..1fef50a52ec 100644
--- a/spec/support/helpers/test_env.rb
+++ b/spec/support/helpers/test_env.rb
@@ -47,6 +47,7 @@ module TestEnv
     'v1.1.0'                             => 'b83d6e3',
     'add-ipython-files'                  => '93ee732',
     'add-pdf-file'                       => 'e774ebd',
+    'squash-large-files'                 => '54cec52',
     'add-pdf-text-binary'                => '79faa7b',
     'add_images_and_changes'             => '010d106'
   }.freeze