Mane left the Reds after six years at Anfield back in the summer, and the Reds have struggled ever since his departure.
Merson told Sky Sports: "I've said it from day one, in my opinion selling Sadio Mane was the worst business ever. The bloke scores big, big goals. Go through them, first goals, equalisers, winning goals in last minutes, big goals.
"He led from the front with his closing down, and for me, what they sold him for, I just didn't get it.
"Darwin Nunez isn't in the same league at the moment. Not in the same league at all.
"Their problems at the back start from the front. They're not closing down as a unit - you can go on about how talented that front three was, but they closed down from the front. It only took one more pass, and they'd score."