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The west London side are preparing for their second season under new manager Antonio Conte following his appointment at the club last summer.
Conte led the Blues to the Premier League title in his first campaign in charge at the west London side as Chelsea won a record 30 games on their way to the title.
Chelsea, however, did not have the distraction of European football last season after missing out on Champions League qualification, with the Blues set to return to Europe’s elite club competition this term.
Merson is tipping Chelsea to finish second in the Premier League this season but also enjoy a successful run in the Champions League.
Speaking to Sky Sports, Merson said: “I think they’ll finish second and have a great Champions League campaign.
“I think they’ll go the furthest in the competition out of the English sides because they’ll go away and get clean sheets. I’m not sure the other sides can do that. They’re by far the most suited to the Champions League format.”
Chelsea bounced back in impressive fashion under Conte last season after their disastrous 10th-placed finish the campaign before.
The west London side have signed four players so far this summer after having wrapped up deals for Willy Caballero, Antonio Rudiger, Tiemoue Bakayoko and Alvaro Morata ahead of the new campaign.