Mercedes motorsport boss Toto Wolff has conceded that Ferrari simply had the better car/engine package after drivers Lewis Hamilton and Valtteri Bottas finished behind race winner Sebastian Vettel.
Hamilton led the first stint of the race from pole position, but slipped behind Vettel after an early pitstop for soft tyres.
While Mercedes was the fastest car during long runs on Friday, Hamilton had no answer to Vettel’s pace - the German going on to win the race by a margin of 9.975s.
While many believed that a strategic error cost the Silver Arrow a victory, Wolff believes the SF70H was anyway quicker than Mercedes’ W08 Hybrid.
"Today, Ferrari was the quicker car," Wolff told Sky Sports. They put us under pressure from the beginning and that's how we lost it.
"We had the feeling that the tyres were not lasting, and we were worried about the undercut possibility, for Sebastian, so we decided to pit Lewis with all the risks.
"We knew that we would come back out behind [Kimi] Räikkönen and Verstappen, and that's what happened, and they [Ferrari] played it very well.
"We were held up, but that's how racing goes.
"You lose a lot of tyre grip and downforce when you are following, and Ferrari was the strongest package today because they were able to follow."
With Ferrari’s pre-season threat materialising in Australia, Wolff expects a two-horse fight with the Scuderia for the title.
"We saw that Ferrari was very strong in Barcelona in testing, and also [in final practice] on Saturday before qualifying, they were a real force.
"It's going to be very close, as there are no big margins between the teams, and also team-mates.
"It's going to be a more stressful season in the past!
by Rachit Thukral