Completion does not work if $TERM is set

[jpfr]

Hey there,

thank you for this great tool!
However, I can't get it to work in an emacs shell with color.

If I set the $TERM variable to a known value, e.g. xterm-256color, then the completion stops to work.
Setting $TERM to empty in the running shell solves the issue. But I loose all color output.

Any ideas where to look for a fix?