Hi Adam,
According to my understanding and experience, the automatic conflicts merge is a functionality that is the less used the better. This is because it just handles physical differences between code lines but not the code logic or dependent changes in several files.
Besides that, practically all items of the TestComplete project (except code units) are xml-based files that cannot be merged but must be handled as an atomic entity.
Considering the above, the recommended approach with TestComplete (see the 'Working With Source Control Systems' and 'Teamwork' ('How to Organize Simultaneous Work With Shared Projects') help topics for more details) is to split the testers' activities so that they do not interfere with one another.