The reaction of heterolytic dihydrogen splitting by frustrated Lewis pairs P(R)3 and B(C6F5)3 (where R = t-butyl and 1-adamantene) is driven by strong three-body contributions which originate from the induction and charge transfer effects. The three-body effect increases dramatically as a function of inter-hydrogen distance. As predicted by the symmetry adapted perturbation theory, the "frustration" of Lewis pairs originates from the dual role of the exchange effects. First, the exchange manifests itself in the first-order Pauli repulsion by keeping the pairs away. Second, and equally important, the second-order exchange-induction almost completely cancels the effects of the second-order induction. This suppression of induction effects eases up upon the interaction of the frustrated pairs with H2. The activation of induction in this instance constitutes the three-body effect.