How do I minimize merge conflicts in a ReadyApi composite project when working as part of a team?

As others have posted, use "pretty print project" setting and composite projects - these will make understanding the changes a lot easier. I would add using .csv files for data sources instead of .xls which are binary files. 

I would add that if you are doing groovy scripting, then store dynamic data in the context object instead of in a property. You can still access it in a later test step in the test case but that data won't be saved to the project.xml.