Merson said he 'can't remember' witnessing such an inadequate Arsenal performance after the Gunners were thrashed 3-0 by Jurgen Klopp's side.
Having dropped to 10th in the Premier League, Merson has drawn similarities between Arteta and Jose Mourinho's managerial style.
Paul Merson delivered a damning assessment of Arsenal boss Mikel Arteta and his squad
Merson says he was shocked by Arsenal's display in their 3-0 loss to Liverpool on Sunday
Speaking to Sky Sports Merson said: 'What I watched against Liverpool the other day was as bad as I've ever seen.
'People will say about the times under Unai Emery and at the end of Arsene Wenger's reign, but I never saw anything like that.
'All I saw was rolling the ball back to the goalkeeper and he just lumped it down the field.'
Merson says he 'can't remember' seeing such an inadequate Arsenal performance
Having got off to their worst Premier League start in history, Arsenal have struggled to overcome their drastic dip in form. As a result, they are on track to complete their worst Premier League finish since 1995.
Merson believes there are similarities between Arteta and Mourinho's managerial style after analysing the way in which they have both dealt with their failure this season.
He also says Arteta is very similar to Mourinho, despite being different on camera
He said: 'When they get beat and he comes out and takes the blame, he's just doing the opposite to what Jose Mourinho does when he criticises his player, but Arteta is thinking exactly the same as Mourinho.
'Mourinho just says it and the difference is one manager has been around for a long time and he's won everything in the game.
Pressure is on Arteta and his men this evening as they require a result against Slavia Prague in their Europa League clash to keep their Champions League dreams for next season alive.