Droplet coalescence is determined by the combined effect of the collision frequency and the coalescence efficiency of colliding droplets. In the present work, the effect of geometrical confinement on coalescence efficiency in shear flow is experimentally investigated by means of a counter rotating parallel plate device, equipped with a microscope. The model system consisted of Newtonian droplets in a Newtonian matrix. The ratio of droplet diameter to plate spacing (2R/H) is varied between 0.06 and 0.42, thus covering bulk as well as confined conditions. Droplet interactions are investigated for the complete range of offsets between the droplet centers in the velocity gradient direction. It is observed that due to confinement, coalescence is possible up to higher initial offsets. On the other hand, confinement also induces a lower boundary for the initial offset, below which the droplets reverse during their interaction, thus rendering coalescence impossible. Numerical simulations in 2D show that the latter phenomenon is caused by recirculation flows at the front and rear of confined droplet pairs. The lower boundary is independent of Ca, but increases with increasing confinement ratio 2R/H and droplet size. The overall coalescence efficiency is significantly larger in confined conditions as compared to bulk conditions.