The German made the comments to the Scottish Sun newspaper following Tuesday night's game at the Nou Camp which saw the Glasgow side lose 2-1 to a last-minute goal after a mainly backs-to-the-wall performance.
Schuster accused Neil Lennon's side of being too negative in the Group G clash in which Celtic took a surprise early lead before they went back into a defensive shell in a bid to preserve their lead.
"I'm fed up of seeing these type of matches," he said. "There should not be teams like Celtic in the Champions League.
"We saw it last year with Chelsea. It was a very bad example for football and it is regrettable that they became European champions.
"You see Celtic defending with 10 men and almost snatching a point - that is not fair.
"I believe the coach of Celtic viewed many times the video of Chelsea last season against Barcelona.
"He decided to repeat the system, but the ultra-defensive system is not football.
"Chelsea have now generated a school for teams like Celtic to study. It would have been unjust if a team that defended with 10 men had taken one point in the home of the best club in the world.
"UEFA needs to change this phase of the competition if they want to breathe life into the Champions League.
"Celtic do not merit their place if they are going to play in this style."
Celtic unworthy of Champions League, says Bernd Schuster
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