I'm a huge Merc fan and from personal experience, Beemers and Mercs are not substitutes, they are more compliments. There is a time and place for both.
Even as BMW fans, you cannot deny Mercedes their due. Their cars are amazing and even when compared to BMW, they can hold their own. I will admit though, in terms of driver involvement and dynamics, BMW wins.
Depending on what "ruler" you use to measure a good car, you may prefer one or the other, and after owning 2 BMW's, I have to say that BMW's have personalities, THEY ARE ALIVE!!
But everytime I get into a Merc...

raise: oh man... They are so sophisticated, so elegant, so discreet, so poised and composed...
In a BMW, you want to drive forever, but in a Merc you want to travel forever