If the GS1 Company Prefix is of variable length, isn’t there a possibility that numbers created from prefixes of different length can collide?

No, because of the way GS1 Company Prefixes are assigned to companies. For example, if GS1 US assigns 7-digit GS1 Company Prefix 0614141 to a company, it will not assign 8-digit prefix 06141411 to another company, because numbers created from the latter would collide with numbers assigned by the first company