However, the Ivory Coast international – who endured a mixed first campaign in north London – was benched at Craven Cottage on Saturday, with Arteta instead opting to give new signing Willian his Arsenal debut.
Pepe replaced the former Chelsea star with 15 minutes remaining but by that time Arsenal had already put the game to bed, with goals from Alexandre Lacazette, debutant Gabriel and Pierre-Emerick Aubameyang securing a 3-0 win.
Asked about Pepe’s omission, Arteta said: ‘Well, it’s not [just] for Nico, I think it’s for the players that were on the bench and as well the ones that we had to leave at home.
‘If they raise their levels then the performances of the team and club are going to improve and this is what I demand from them.
‘I’m really happy with all the boys and the way they’re training, but selection is getting more complicated and with this new rule of just having only 18 players in the squad makes it very difficult.’
Arteta also admitted he was surprised by the performance levels of fellow new signing Gabriel following his £23m move from Lille.
‘He hadn’t played any football for six months so to come and play a game in the Premier League after training with the team for three or four days is a big task,’ the Gunners boss added.
‘Willian knows the league, the country and is very settled here so I knew his performance would settle straight away.’
Arsenal, sitting top of the Premier League after their emphatic opening-day win, face London rivals West Ham next weekend.