There is no foul play going on, Mercedes planned this from the start. They knew that coming back into the sport they had no chance to catch the dominant Red Bull cars so for the last 5 years the team has been solely focused on developing a car for this season's rule changes. Mercedes intentionally made the decision to have a worse team the last few years to put more money toward R&D for this season. This sacrifice culminated in them having a better designed car than any other team this year with their innovative turbo/compressor placement:

http://www1.skysports.com/f1/news/12472/9243875/revealed-how...

Your engine point is moot, because it is up to the team to implement the supplied engine and there are huge monetary differences between teams. A team buying supplied engines is always at a disadvantage in terms of time and design because they didn't design the engines. They have to adapt their car to the engine, while the manufacturer team can develop both in concert. Its similar to Android vs. the iPhone, Apple's products use similar parts but the experience was better because its OS and hardware were developed together, instead of hooked together at the end like Android phones. Also, F1 is not fair in terms of money. Manufacturing teams, Ferrari, McLaren, Mercedes etc, have R&D budgets multiple times the size of the smaller teams. Even though, Force India buys Merc engines, they have a fraction of the budget to figure out how to optimize it, and terrible drivers in comparison.