Tax evasion creates significant market distortions, allowing non-compliant firms to gain an unfair cost advantage over efficient, formal competitors. Despite this, major competition authorities often overlook evasion as a form of unfair competition. This paper investigates the tension between tax enforcement and competition policy using a Cournot-oligopoly model. Our analysis reveals that while tax evasion incentivizes incumbents to adopt costly exclusionary behaviors to deter entry, antitrust agencies typically focus only on the resulting non-competitive reactions. We find that to maximize consumer surplus, competition authorities must endogenize the impact of evasion, aligning their enforcement strategies with tax policy to mitigate market-entry distortions.